In soaring housing costs, Vancouver is not alone – but London offers hope
STEPHEN QUINN
Special to The Globe and Mail
People who live in this city know all too well the problem of housing affordability.
The mayor has outlined the issues well: “People who grew up here unable to rent or buy, parents forced to raise children in homes that are too small, rents taking up more and more of people’s income. Home ownership is slipping increasingly out of reach for more and more. Many now face far longer and more expensive commutes, and businesses struggle to recruit and retain the people they need to grow and prosper.”
When I say, “this city,” I’m not talking about Vancouver. The city described above is London, England. And when I say, “the mayor” I’m quoting Sadiq Khan, London’s newly elected Labour Party mayor, who has made housing his priority.
The quote comes from Mr. Khan’s housing manifesto – part of his election campaign.
There is more. Mr. Khan told The Guardian this week: “There is no point in building homes if they are bought by investors in the Middle East and Asia. I don’t want homes being left empty. I don’t want us to be the world’s capital for money laundering. I want to give first dibs to Londoners.”
You can be forgiven if every time you hear “Londoner,” you replace it in your mind with “Vancouverite.”
“The housing crisis is the single biggest barrier to prosperity, growth and fairness facing Londoners today,” the manifesto reads. “The city’s shortage of decent and affordable homes is causing real misery to millions of Londoners, and damaging London’s competitiveness.”
People in the Lower Mainland are dealing with exactly these issues. We’ve heard it time and again from municipal councils, business organizations and think-tanks at both ends of the political spectrum: The lack of affordability is driving people (especially young people) away and hurting business.
The degree to which this is the fault of offshore investment – foreign buyers parking their money in Vancouver houses that are often left vacant – has not been determined. Yes, academics and others who have nibbled around the edges of the problem have concluded foreign investment has some impact, but they are not certain how much. “Not enough data,” we are told. Also, some people believe even asking the question is somehow xenophobic, which is silly.
In London, the British Property Federation commissioned a report with the straightforward title Who Buys New Homes in London and Why.
The report looks at sales in 2013, and contains some startling numbers.
For instance, 61 per cent of all new homes sold in London in 2013 were bought by investors. Of those investors, 15 per cent were offshore buyers not living in London. Fifteen per cent is a London-wide figure. In what is known as Prime Central London, 49 per cent of new homes were bought by offshore investors.
The report’s conclusions will also sound familiar: Some investors buy, and then sell at or before completion – an activity that can lead to increased volatility. (No word on “shadow flipping” yet.)
New homes are priced beyond the means of first-time buyers and “normal Londoners.”
Investors can buy homes simply as a “cash dump,” leaving them empty in a time of housing crisis.
So what is the new mayor of London going to do about it?
Mr. Khan’s plan will require that 50 per cent of new units in certain developments be deemed “affordable” – meaning tenants would have to spend no more than one-third of their income on rent. (The former mayor defined affordable as 80 per cent of market rates.)
He will use publicly owned land for new housing, and co-ordinate development with future transportation infrastructure projects. He will create a rent-to-own scheme for Londoners who have “been stuck renting for over five years.”
And he told The Guardian he is also considering a measure that would require new homes to be marketed exclusively to Londoners for six months before foreign buyers are allowed in.
Some of the proposed solutions may sound as familiar to Vancouverites as the problems. The city of Vancouver has promoted similar affordability schemes. The difficulty is that, unlike London, Vancouver needs the permission of a senior level of government – namely the province amending the Vancouver charter – before much of its plan can be put into action.
I have never felt hopeful about Vancouver’s housing problem. Too much has been staked on the equity of people who already own their homes and there is no appetite for a solution that might upset the status quo. Like many, I have been resigned to the seemingly inevitable fate that this will shortly be a city devoid of families with children, where only rich people live and play.
But looking at what is going on in London, I see a glimmer of hope.
It is very, very faint. But it is there, in the distance way across the pond.
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