Thursday, March 13, 2014

Johnson's London – a millionaire's playground

Crossfields residents receive constant reminders from the government about how big a discount they can get if they buy their flat. The frequent flyer from the Department of Communities and Local Government comes through the door with regularity, whether you're a tenant or already a leaseholder. Bigger discounts than ever before are now available for Right To Buyers as the Tories push through their evil plan to get rid of 'social housing' altogether. What possible incentive can there be to build more social housing when tenants can buy their properties after only five years?

Meanwhile, the Bedroom Tax is forcing some unemployed social housing tenants into private housing since there are no one-bedroom flats available for those single occupants currently living in two-bedroom homes whose housing benefit has been cut. If they can find a landlord who will take DHS claimants, the private rent is likely to be at least twice as much (£250pw) as their council rent (£110pw), a bill which the council tax-payer and local authority will foot and from which private landlords will profit. Continuing low rates on buy-to-let mortgages has landlords increasing their property portfolios and enjoying record yields on higher rents, and profits from rising house prices.

Add to this the total lack of affordable housing being built, whilst Boris Johnson boasts about meeting housing targets. The Financial Times reports that Bozo promised 55,000 new homes between 2011 and 2015 but only 20,684 are being built. The London Assembly reports that he's recently opted to 'clear London's backlog of housing need' over 20 years – instead of the 10 years he initially proposed.

In the news today, we hear that nine London boroughs have joined forces in a legal challenge against the Mayor's plan to relax 'affordable rents' rules, to be heard in the High Court today and tomorrow. Presently, boroughs have been able to cap social housing rents within new developments (what little there is) to around 40% of 'market rent'. Bozo wants to raise that cap to 80%. That is the percentage that has defined 'affordable housing' for a while now, and for most Londoners, this is still unaffordable. Lewisham set its cap at 50%. Lewisham is not one of the boroughs taking Boris to court. When Lewisham sells off its housing stock next year to a reconfigured Lewisham Homes Housing Association, new tenants may well find themselves paying 80% of market rent.

Speaking from a developer's conference in Cannes yesterday, Bozo announced that he'll be selling up the last couple of development sites owned by City Hall, with only a third available for affordable rented housing. And he wants to launch a 'state-backed housing bank' that would offer cheap loans and guarantees to private developers to get homes built more quickly and reduce the risks for his builder mates.

The news today from the same Cannes property conference is that Bozo's team want to allow house bulding to go ahead without planning permission in certain parts of London. Deputy mayor for housing, Richard Blakeway, said the mayor was "particularly interested" in exploring the potential to "build markets" in certain zones by offering tax incentives to both "investors and consumers". The Mayor could use his compulsory purchase powers to acquire land for private residential use, at the expense of any borough's strategies to achieve a balance of uses (such as employment zones and community uses). These changes to the London Plan are said to be designed "to encourage boroughs to support private rented housing".

The London Assembly has also recently questioned the Mayor about his stripping of London boroughs' right to make planning decisions by using his power to 'call-in' large planning applications. He has already 'called-in' five schemes in the past year. In many cases, Bozo has been 'calling-in' applications before the local authority in question has even had a chance to examine them. (See also the Deptford Dame's latest post).

Darren Johnson, Green Party Assembly member, said, "The recent acceleration in the number and speed with which the Mayor is taking over planning decisions from boroughs...puts developers and investors before local democracy". The Assembly's motion (agreed by 16 votes to 5 against) listed 11 applications – including Convoys Wharf in Deptford – and said that on many decisions, the Mayor has ignored legitimate borough concerns about issues such as inappropriate density and very low targets for affordable housing.

This isn't new. In 2009 in Tower Hamlets, when there were 23,000 people on the housing waiting list, the council refused planning consent for the 74-storey Hertsmere Tower in Canary Wharf because it didn't include enough provision for affordable housing. But a few months later, Boris Johnson overturned the council's decision and Hertsmere is set to accommodate over 700 luxury apartments, some marketed in excess of £10m each.

Here's Boris at the Cannes property conference in 2012, announcing his new 'architecture, design and urbanism' panel for architects, which was to hand out £30m worth of work over the following three years. There's Terry Farrell, second from left, one of those appointed to the panel and the architect employed by Convoys Wharf developer Hutchison Whampoa.

As any fool can see, there has been an enormous amount of new housing being built in London, especially locally. Like many of these new developments, Convoys Wharf has a minimal amount of affordable housing (down from 35% to 14%, and social housing from 4% to zilch). As the Deptford Dame pointed out back in November, another site owned by Hutchison Whampoa – Lots Road in Chelsea – is already being marketed via their Hong Kong estate agency. (See also the BBC film "London's Property Gamble").

Darren Johnson says, "London's property market is only serving the super-rich, leaving crumbs for ordinary Londoners, who have to rent overpriced homes on insecure tenancies or move out of the city altogether". A new industry has even built up around helping developers avoid building affordable housing and paying Section 106 to local authorities (the bribe – or money paid by a developer that is  supposed to benefit the communities in which the development is sited). (Click to enlarge).

The Evening Standard reported yesterday that the number of skyscrapers in the capital is set to double. Meanwhile, Chinese investment in the UK is forecast to triple this year. Boris is busy signing up business deals with Chinese investment consortiums wanting to turn London into a replica of Hong Kong – with a focus on construction projects of all kinds. Meanwhile, Hutchison Whampoa has been busy selling off its luxury properties in Hong Kong since the Chinese state are bringing in 'cooling measures' – described as 'a tough stance on reining in an overheated market' (in other words a 'bubble') – with new rules on the sale of new homes, and stricter rent controls – the opposite of here, in fact. 

Boris Johnson's London is a playground for millionaires. Of course Bozo doesn't want to take over Cameron's job. While Cameron has only a year left to decimate the lives of millions of ordinary people across the country with austerity measures whilst rewarding bankers, Bozo has over two more years to promote and implement their hideous Tory agenda across the capital.


  1. Maybe I'm out of touch, but unfortunately I'm a private renter but the thing that jumped out in the article for me was that council rent is only £110pw???!!!!

    Not only am I therefore paying substantially higher rent in the private sector, but with the little money I have left I am then subsidising others on a similar income as me (or sometimes more!) to have a place in London (a world class city) for just £110pw?

    Something is not right here.

  2. Yes, Anonymous, it is quite a difference isn't it. Firstly, you have to remember that local authorities are not making a profit on their housing stock, unlike your landlord.

    The subject of 'subsidised' housing is a complex one, and the rules are changing so that council housing becomes 'self financing' (see this government webpage). Council rents will inevitably go up.

    But official figures show the government spends more money on supporting owner-occupiers than social tenants – see this helpful article which puts subsidies into broader context here

    It also points out how rents in the private sector are subsidised by housing benefit when tenants don't earn enough to pay the rent. Maybe you should be claiming yourself.

    Your 'world class' city needs servicing and this is done by very low paid workers. Where are they supposed to live? Outside the city where half their wages go on travel? For people perhaps like yourself who may be on a better wage or salary, what is needed is rent controls, but do you hear this government talking about that? God forbid!

    All London boroughs have huge waiting lists for their so-called 'subsidised' housing. Perhaps you should go on the waiting list? Only the most vulnerable (usually those with children) rise to the top of the list, which is probably why many like yourself do not bother to apply. But there are other options for those on the list apart from council housing (such as housing associations and shared ownership etc), so it is worth getting on the list if you are struggling with private rents. You have to be on the list to get into a housing association – where you might then find some 'affordable housing' at 80% market rent.

    Either way, not enough 'affordable housing' is being built under present regimes because developers argue their schemes would be 'unviable' (less profitable). The owner of Convoys Wharf argues this and he is the 8th richest billionaire in the world. The 78th richest billionaire, Rupert Murdoch, has a profit share in the sale of those luxury apartments (which will be sold overseas before they have been built).

    Something is not right there, either!

    1. Just heard all 121 flats in the Deptford Project have been sold to a Hong Kong property management company. You couldn't make it up.

  3. For goodness sake, the government is subsidising builders already and giving grants out to investors who already pay no tax. Massive green energy payments raised by energy customers have gone in grants to Chinese investors. They have no shame. The NHS is being sold off to their private mates, many of whom are in government as well! There's no end to their corruption!

  4. Then there is the fact that only those vulnerable in Lewisham borough can get on the housing list in the first place. Low priority people like myself cannot get on the housing list, and therefore locked out of most if not all housing associations. I was told when applying that 8000 people were taken off the list as low priority. Great - I have to have a child,drink/drug problem or an acute mental health issue to get a council flat.

  5. Your right it's complex, Sue. I like this estate cos it's got a nice mix. Not just council tenents but people renting from people who Buyed To Let. So students can afford to rent here and nice young couples can afford to buy their first flat off some tenent who profited from their discount and probably with the help of their parents. It makes it a nice-ish place to live cos people are on the whole quite civilised. Its not a ghetto of poor people, just a place where poorer people live. The problem I agree is when the private rents on the bought flats are too much where the owner just bought the flat to let and try to make a profit.
    I expect students sharing a flat are probably charged too much but they aren't charged as much as when they rent a flat in Bermondsey tho I think we are catching up. those renting out seem to think the average rent is £1200 a month from what I can see from just looking at Zoopla in this area and that is really stupid rent for round here. The situation is out of control – rent control as you mentioned.
    So what I am saying is Right to Buy sort of works on this estate and offers opportunities for others to rent cheaper who can't get on the housing waiting list cos they earn too much, or for people to get on the property-owning ladder if they dont mind living side by side with people with less education and less job opportunities or foreigners which many dont want to do cos their so status-driven and want to look better than they are so couldn't bear to live on a council housing estate.
    I think it is getting worse tho. Estate agents are always leafleting too. and I don't think this Mayor is helping. well mayors in general I think.

  6. Paul, I stand corrected. Waiting lists have been slashed and loads of people are no longer eligible as this report confirms. It was always difficult for single men anyway.

    We need Rent Controls NOW (see recent report). Darren Johnson and Shelter are on the case, but the Tories hate the idea. It needs talking up to get it top of government agenda. The Labour Party should adopt it as a policy.