Social housing needs to stop being squeezed into developments as we go along

We need a big fix to a big problem – and one that offers more people a real hope of owning their own home one day

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The Independent Online

Like millions of working-class people, I first realised I was a Conservative when I first understood that this was a party which wanted to get me onto the property ladder.

I was young, aspirational and determined to break free of the culture of low-expectations that helped to keep people like me in my place. And policies like the Right-to-Buy were all about overturning that old order, giving everyone a chance to own their home, setting people free to make their lives better. If there is one thing that I believe unites the Conservative Party and earns us the trust and confidence of hardworking families, it is this principle – that a society where everyone has the chance to own a stake in their own future is a better society.

That’s why Labour’s message on homes is so dispiriting, depressing and retrograde. When Ed Miliband isn’t bullying grannies in Richmond because they happen to live in houses that have – through no fault of their own – rocketed in value, he and his party are busy obsessing over social housing.

Tessa Jowell, the favourite to become Labour’s candidate for Mayor of London, is demanding that developers hand over 30 per cent of the properties they build to social housing. It sounds nice and cuddly. But it’s premised on a fundamental misunderstanding of how the economics of home-building works and highlights the appalling lack of imagination and aspiration that now characterises the Labour Party’s approach to this vital issue. Labour don’t care if low-income families who work hard and play by the rules ever get a chance to own their own homes. And they don’t seem to care about really kick-starting house building.

Of course London – and the country as a whole – desperately needs new housing stock. We’re all familiar with the crisis of supply that has both shut young families out of the market and meant that houses like the one owned by that granny in Richmond are suddenly worth a medium-sized fortune. But the solution is not to tax accidental paper millionaires. And it’s not to artificially reduce the value of new developments – making it less economically viable to build new homes – by demanding that swathes of new flats be designated social housing. What we need, in London and the South East in particular, is radical reform to the way we plan and to the way we ask developers to pay their way.

The current system doesn’t work for two reasons. One, local authorities negotiate with developers to extract what’s of use to them – not to maximise the amount of affordable housing – under a process known as a Section 106 agreement. This system means that developers face the arbitrary whims and political agendas of local councillors rather than a clear, straightforward and secure process that determines their social obligations. Two, it is a wildly and ridiculously inefficient use of resources.

Let me give you an example. Jasper Conran’s new Centrepoint development – in the very centre of London – offers a range of luxury apartments averaging £3.2m each. Under an agreement with the Local Authority, thirteen of these are earmarked for social housing. Although they are not in the prime block, this means that thirteen lucky, social tenants are being housed in real estate valued around £41.6m. That’s a lot of money to spend on a dozen families in a borough which, just two years ago, moved 700 families up to 200 miles away because of a housing shortage.

The situation is untenable, clearly. But the solution can’t be to simply try to squeeze more and more social housing into developments as we go along. We need a big fix to a big problem – and one that offers more people real hope of owning their own home one day. So here’s my plan.

As Mayor of London I would scrap Section 106 altogether. Instead, I would give developers the security to buy land and build on it knowing exactly what their liability is by charging a percentage fee on any development. So, if we took the value of the Section 106 agreement at the Centrepoint development, for example, that could be a lump sum of some £40m.

Yes, you’d lose those thirteen flats. But investing that money in building new, designated housing specifically aimed at part-ownership and shared equity for people who live and work in London but don’t happen to be bankers could generate over 150 homes on brownfield land less than a mile away. And this is not Nathalie Bennett’s "plywood plan". I’ve been a property developer and I know that these schemes have to be affordable for the Mayor as well as affordable for prospective residents – we’re calculating an average cost of £250,000 a home (incidentally, two and a half times the Green’s building estimate).

Turning City Hall into a massive property development company may seem an odd aspiration for a Conservative candidate. But I believe it’s absolutely in the spirit of Lady Thatcher. She understood that the resources of the state should be put to use empowering and encouraging people to make a go of their lives, to look upwards and outwards and have higher expectations for themselves and their families.

By liberating the funds currently locked up in tiny developments aimed at making councils landlords again – and using that cash to build affordable homes for working people who want to own a stake in their future – London can show the rest of the country the way to re-energise the housing revolution that showed millions of us we were really Conservatives after all.

Ivan Massow is a Conservative party candidate for London Mayor.