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It is a pleasure to speak under your chairmanship, Mr Owen. I congratulate my hon. Friend Chris Philp on having initiated one of the most important debates that we can have in London. I want to echo a point made by my hon. Friend Mr Hurd, who talked about the changing dynamic in his constituency. I have no doubt that that is echoed all the way around London. When I was selected in 2008 to be the Conservative candidate for Richmond Park and north Kingston, the main emphasis in the hustings, in the open primary, that decided it in the end was who was going to fight off the inappropriate development best—who was going to take it to the developers. And the very same people, just a couple of months ago in the run-up to the most recent general election, were asking in the hustings, “How on earth are our children going to get on the housing ladder? There is no prospect of it at all.” There has been a sea change in public attitudes, and I do not think there is any doubt that housing is the No. 1 concern in London. The population is soaring and will continue to soar. We expect the population to hit 10 million over the next 15 years and we are not building anything like enough to match that demand, so volume does matter.
The average price for the first-time buyer in London is, as has been said, more than £400,000. That requires a deposit in some cases of about £100,000 and an income of about £75,000 or £76,000 to manage the mortgage. Rent is more than double the national average. Even in the least expensive postcodes in London, renters on the London living wage can expect to spend more than 40% of their income on rent, which means that they have no chance of saving for a deposit in order to get, eventually, on to the housing ladder. Therefore, Londoners are already being priced out of their own city. That is hurting families, but also our competiveness as a city.
There is no single answer, but a lot can be done. In the two or three minutes that I have left, I will not be able to talk about some of the really meaty, interesting issues such as devolution of property taxes, which was touched on in the last speech, or another issue that I do not think has come up, which is putting empty homes back on the market. There are about 80,000 empty homes in London that should not be empty. The current Mayor has done more than, I think, any other British politician in living memory to bring empty homes on to the market, but we have a long way to go and we can be more robust.
However, the bottom line is, whether we like it or not, that we need to build more—45,000 to 50,000 homes every year just to avoid a crisis. The question then is how we do that. There is the problem of land banking, which has been raised. There are more consents to build than developments actually happening, but it is not just the private developers that are land banking. As has been mentioned, there is an enormous amount of publicly owned brownfield land—it is owned by the public sector. TfL alone owns the equivalent of 16 Hyde parks. The
NHS owns an enormous amount of land that it is not using. A typical local authority can own up to one third of the land in its borough. We can deliver the homes that we need in London without even touching the green belt—without encroaching on our green spaces at all. I strongly welcome the initiative by the Mayor and the Government. The London Land Commission will provide the inventory that we need. We do not have the information at the moment, but we will shortly.
However, to get building we also need to address a problem in the development sector, which is that it has increasingly become an oligopoly. A very small number of mega-developers account for the vast majority of the building that we see in London and, in turn, demand unrealistic levels of return based on often spurious “viability tests”. There is a need to open up the viability test and to help local authorities with the expertise they need to deal with the developers and with that process.
To build new homes, we need three things—I am aware that I have only two minutes left, so I am going to rush. We need land, which we have. We need planning, which, between the local authorities and the Mayor, we have. It is possible to de-risk development with the powers that the Mayor and the local authorities have between them. And we need finance. It is not difficult to get that finance, for precisely the reason that we have heard from a number of hon. Members. There is an overwhelming appetite among people around the world to invest in London. At the moment, that is causing serious resentment, because buildings are being built and then bought by people who have no intention of living in those buildings. “Safety deposit boxes in the sky” is how they are often described.
That appetite is there, but it does not have to be a negative; it could be a positive. If we channelled that investment in order to deliver the homes that Londoners need—affordable homes for purchase and for rent on publicly owned, publicly available brownfield land—we could turn that negative into an overwhelming positive. We could create a pan-London investment vehicle designed to attract that investment. There are people who, because of the volatility and dangers in the world around us, want to put their money somewhere safe—that is, in London property. We could create that investment opportunity for them and for the pension funds, which want nothing more than long-term investments—low risk and medium return. This is ideal for London property. We need to find a way of creating that vehicle to attract and then channel that funding in such a way that it does good.
I note the comments made by my right hon. Friend Mark Field. I very much agree with the thesis that he put forward. We need to look carefully at the ideas that he suggested, some of which I think absolutely do need to be implemented.
In my remaining minute, let me say that one huge opportunity we have is to redevelop some of the poorly designed estates that were put up in the ’50s and ’60s. My hon. Friend the Member for Ruislip, Northwood and Pinner mentioned Create Streets, an organisation that has been looking closely at this. It takes the view that if we were to redevelop about half of London’s 1950s and 1960s estates, we could increase density even while lowering the height of these buildings, which would improve their attractiveness and quality. By doing so, we could potentially provide the affordable homes that we need for the next 10 to 15 years. There is an enormous amount of work to do there, and it is a massive opportunity.
Let me end by saying that whichever route we take, it is essential that we build well; that we work with, not against, communities; and that we build homes that enhance communities. We know how big the challenge is, and if we build badly—if we dump hideous buildings and disproportionate developments on communities—we will exhaust Londoners’ appetite for the level of development that we will need if we are to have any chance of delivering the required number of homes.