Nearly a decade after the publication of Anna Minton’s book Big Capital, Who Is London For, an excoriating analysis of London’s housing market, a lot has changed. But also, a lot hasn’t.
Published in 2017, Minton’s short polemical shone a light on London’s housing economy. Centering on the lived experiences of Londoners, Minton heavily critiqued estate regeneration, the influence of private capital in the development process and the perceived dominance of investors both domestic and overseas in buying up London’s housing stock.
Minton centered her ire at the Elephant and Castle. A controversial estate regeneration that failed to replace all the existing social housing.
Today, many of the issues Minton signposted have been acted on by policy makers. But what has worked and what hasn’t? Are we any closer to solving the housing challenges that bedevil London and other cities?
A policy response
At the time of publication, estate regeneration didn’t require replacement social rented stock. There were examples where the community engagement process fell well short of what it should have been. Big Capital focused on the challenges of renewal within existing communities where the built environment might be degrading but community spirit remained strong and proud.
The response to these concerns has been meaningful. Estate ballots and stretching targets of social housing additionality have been introduced. She was listened to and policy makers responded.
Meanwhile, the perceived ease to which investor capital could gobble up London homes has also been addressed. Starting with George Osborne’s changes to buy to let tax rules, smaller landlords have increasingly felt the squeeze by successive Governments. Buy to let investment is no longer a key driver for London new homes. In a recent podcast interview, Rob Perrins highlighted this. Whatever you think about London’s housing market today, you cannot say that Landlords get an easy ride on tax anymore.
Throughout Big Capital there are frequent references to ‘scandalous’ financial viability assessments. You’re left with the perception developers got away with limited affordable housing contributions in a clubby environment where cliques and power relationships dominated.
Today, viability testing is a highly evolved arm of the planning system. The Mayoral fast track approach is well established. Viability is not a push over and every assumption comes under scrutiny. So many of Minton’s concerns landed.
London today – have interventions worked?
So much has changed since Minton published her book. What has not changed is we live in a highly challenging housing environment.
At the core of this book, Minton is right. We have under invested in the UK’s housing stock. The result, widening inequality. But whilst she sign posted problems, solutions that work are in short supply.
For it turns out far tougher rules on capital are not the answer. General supply is in decline. The assumption that tightening up viability testing and increasing tax thresholds both for development and investment would lead to more public benefits and similar levels of activity has been proved incorrect.
House building is extremely expensive. It requires significant amounts of investment capital and we must accept the Government does not have the resources to fill the gap if private capital does not participate. And, even if the Government did have the resources to intervene more, I find myself asking would it likely obtain the political mandate to build at scale which it is required with taxpayer money.
Big Capital requires private capital
Whilst we have moved on from Minton’s 2017 of free ranging capital, the world of 2026 remains highly challenged. The end of buy to let means fewer landlords waiting to buy homes. This has helped send sales rates into deep freeze and rents souring as landlords exited the market and developers have fewer markets to sell into.
If small investors were willing to let their capital return a 4% yield to provide a stable rental stock, was that really such a bad thing? Particularly if there is no other source of capital there to get the wheels moving.
At the same time, increasingly demanding regulation and design requirements equates to more costs. Exacting thresholds on underfunded social housing chip away at limited viability. The result has been a sharp reduction in general supply.
Minton talked enthusiastically of Community Land Trusts and land ownership nationalization. But, the reality is land is only a small part of the costs associated with brownfield development. The complexity, cost and time comes in the building and for that investment capital must be rewarded if we are to succeed.
The bigger picture
What Minton doesn’t address and what policy makers need to work hard to solve is how we accommodate private capital. Because, as we have learned since the pandemic and the publication of Minton’s polemical, when Big Capital goes on strike, no one wins.
Thanks to the NLA, we have a clearer view of the importance of the built environment as a sector. It contributes nearly a quarter of Great Britain’s GVA and around 12% of the entire country’s work force.
This is a sector that makes profit and brings in tax receipts. Its a sector that creates proper jobs and skills. It must be encouraged and the public estate must find ways of energizing it not inadvertently snuffing it out.
When done well, the built environment can achieve amazing outcomes. It can transform places and create thriving local economies. It can create spaces for small businesses and places for communities to coalesce. We must not lose sight of this in a drive to tackle housing inequalities which of course we must also do.
To succeed, private investment must be augmented with innovative public funding to deliver social and other forms of affordable housing. Asking private capital alone to speculate for profit without the right levels of funding means no one wins and everyone loses. Big Capital is a powerful read more for the questions it raises. The answers though require a more critical assessment of the state, its role and the resources and levers it has available.
