Westminster warning: new council leader promises to crack down on luxury developers
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Westminster council has promised to push ‘cosy cabal’ of developers to provide more affordable homes, whilst a new report from the Mayor of London shows even affordable new builds in the borough have been bought up by overseas investors
The leader of Westminster council has warned property developers that building solely for the purposes of selling to luxury investors will no longer be tolerated.
On Tuesday evening Nickie Aiken warned the London Real Estate Forum that the borough would no longer “simply sell its golden postcodes to the highest bidder” and instead should focus on affordable homes.
Mrs Aiken said: “the political weather has recently changed for everyone, including local authorities and the business community. People have sent a very clear message that they are receptive to a fresh vision of opportunity and equality.”
Mrs Aiken has pledged to end the widening disparity between those who can afford to buy and those who cannot.
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“I do not want to preside over a borough where the housing market is polarised between multimillion properties for oligarchs and council-run estates, with not much in between,” she said.
The City of Westminster borough includes Maida Vale, St John’s Wood, Regent’s Park, Paddington, Marylebone, Little Venice and parts of Swiss Cottage. The constituency of Cities of London and Westminster was held by the Conservatives in the General Election on June 8th.
Westminster currently offers a quarter of its homes as social housing, although only 1.5 per cent are offered at intermediate rates. The council has a 30 per cent social or intermediate target for new developments.
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However, the council’s record is lacklustre. Back in 2011, the target was 50 per cent, and in 2014 it achieved just 22 per cent of its 30 per cent goal.
In the ten years to 2015, 52 per cent of all schemes requiring affordable housing failed to achieve any units on or off site according to a council consultation booklet. The Guardian previously reported that 3 per cent of Westminster’s homeless families are typically rehoused outside Greater London.
Developers will most likely take a dim view of Mrs Aiken’s comments, arguing that overseas investors and luxury buyers contribute to the economy and stability of the housing market.
Savills reported in 2013 that overseas buyers account for 45 per cent of sales of new builds, although more recently Hamptons International have argued that overseas investors are turning away from Prime Central, spurred on by Brexit uncertainty. Mrs Aiken recognised the importance of homes for all budgets, saying: “The property development market is, and has always been, a key part of our great economic success story.” However, she added: “Being friendly to business does not mean engaging in some cosy cabal.”
The Mayor of London, Sadiq Khan commissioned a report into overseas investment earlier this year. The report by LSE and York University revealed that foreign investors bought 3,600 of the 28,000 newly built homes between 2014 and 2016.
Just over half of those were priced for first-timers under £500,000. One in three new homes in Prime Central London were sold overseas whilst across the capital, 11 per cent of properties sold abroad were located in Westminster.
38 per cent of all sales in the borough were made by an overseas buyer.
Officially, affordable homes are defined as those that demand mortgage payments higher than council house rent, but below market levels. For rent, it’s no more than 80 per cent of average local market rent.
The Mayor’s Supplementary Planning Guidance was intended to clear up the government’s limp definition of affordable housing by providing incentives to schemes which provide 35 per cent “genuinely affordable” homes.
His Affordable Homes Programme will provide £3.15 billion to help fund 90,000 new homes by March 2021. 58,500 will be Shared Ownership or London Living Rent, with 29,000 for Affordable Rent.
In May, Khan handed over the keys to the first homes at affordable London Living Rent in south London. The scheme offers below market rents based on a third of local wages.
Westminster currently offers a number of affordable housing schemes. The Westminster Home Ownership Accelerator provided by Dolphin Living targets those living or working in Westminster.
Three year leases are offered at 65 per cent of the market rent. The Westminster Community Homes Intermediate Rent Scheme offers three year tenancies for those earning between £20k and £39k. The Low Income Workers Scheme caters for those earning under £20k.
However, the Financial Times reported that Westminster has been one of the many boroughs to accept cash in place of developments which promise to build affordable housing. In 2015, just one development on the Strand will generate £24 million for the borough of Westminster.
Developments in the borough that have recently been completed are displaying asking prices starting around the £5 million mark.The Berkeley Group’s 190 Strand has prices ranging from £5,865,000 to £9,515,000.
The Group’s Abell and Cleland apartments start at £4,570,000, with the forthcoming prices at 9 Millbank (still under construction) are yet to be announced.
Taylor Wimpey also has homes in its Westminster Quarter development, offering 91 luxury apartments with outdoor space, gym, concierge service and roof lounge.
There are currently 10 tall buildings in the pipeline in the various Westminster postcodes.
Naomi Smith, director of London First’s 50k Homes Campaign said: “The London Plan is clear that the capital needs 49,000 new homes a year, and an important element of that is the provision of more homes that Londoners can afford. Prices have rocketed because we haven’t even built half the homes we need. With average rents soaring past £1,500 pcm, housing is becoming unaffordable for doctors and bankers, not just teachers and nurses. To keep London competitive, it’s vital that all Boroughs consider new ways to deliver the homes we need”