“The last time rising interest rates and high inflation caused governments problems, the Berlin Wall was crumbling, Margaret Thatcher was in her final year in office and it only cost £28 to get into Glastonbury*.
Since then, inflation has drifted way down the nation’s priorities. More recently, pressure on interest rates hasn’t been upwards, but rather downwards – record lows stimulating the economy post 2008 and keeping the wheels turning during the pandemic. In the 17 years since I bought my first flat in Tooting Broadway, 13 of those have seen interest rates below 1%.
It’s hardly surprising we got used to cheap credit and assumed this would carry on into the future. But suddenly the world has changed, and interest rates are on the rise – still a long way short of the 15% they hit in 1989 – but by enough to be causing real pain to those with mortgages, and representing the latest wave in a series of cost of living pressures. And, as we discuss further down, this has an impact on more than just homeowners, with the whole housing and development sector impacted.
And there are political ramifications. The average homeowner is more likely to be older, better off, more settled – and these are generally the kinds of people more likely to vote in elections. For the government, of their 365 seats won in 2019, 315 had home ownership levels above the national average and 43% of mortgage holders voted for the party. It’s therefore little wonder the mortgage time bomb is exercising the political parties. Expect this constituency of voters to be the focus of a lot of attention in the coming months.
As we finalise this week’s LDN, news is emerging on the precarious finances of Thames Water. With the immediate departure of the Chief Executive, Sarah Bentley, announced only yesterday, government ministers have been hastily providing reassurances to customers. The shockwaves for London, Londoners and UK plc should Thames Water collapse will be considerable.
And on what is proving a busy news day, in the last few minutes, Dan Korski has pulled out of the contest to be the Conservatives' candidate for Mayor of London after an allegation of serious misconduct was made against him.
Right on time to brighten the mood, Saturday will see London a veritable technicolour delight as the annual Pride celebrations fill the streets. It is a reminder of London in all its diverse vibrancy – a place where you can find yourself or lose yourself, whatever your preference! With LGBTQ+ rights under threat across the globe and even London not immune from rising homophobic crimes in recent times, Saturday feels more important than ever. From all at LCA, we hope those of you hitting the streets this Saturday have a fantastic day.”
Nick Bowes, Managing Director, Insight
*as a sure sign of inflation, this year it cost £335!
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Rising mortgage payments are turning up the political temperature. Following the Bank of England’s decision to increase interest rates to 5%, borrowers reaching the end of their fixed-rate mortgage are seeing eyewatering amounts added to monthly bills. For renters, landlords impacted by increased borrowing costs are passing this on to tenants through rent rises. With two-year fixed-rate mortgages reaching a seven-month high of 6.23% on Monday, and lenders withdrawing products, it’s little surprise that this is spilling over into discontent with the Government. The Prime Minister has urged the public to ‘hold its nerve’, while the Chancellor Jeremy Hunt, after meeting the country’s biggest lenders, produced a new charter for mortgage holders enabling them to access guidance and transfer onto other mortgage products without impacting credit scores, as well as measures increasing repossession holidays to 12 months. While the Governor of the Bank of England has come under some pressure for the handling of inflation and interest rates, so far Sunak continues to offer public statements of support.
The latest Transport for London (TfL) data has shown that the capital is bouncing back after a few difficult years. Passenger numbers have now reached 88% of pre-pandemic levels, with TfL projecting that this will reach 94% by the end of 2023, with fare revenue reaching the highest level since 2020. London’s businesses, however, are pushing for more support for the capital. They are calling on the Government to change the current immigration system to ease recruitment difficulties, while there are also renewed calls to reintroduce VAT exemption for visitors. On a related note, might London soon follow the lead of Manchester and introduce a ‘tourist tax’ on hotel stays, something which the Scottish Government has also just launched a consultation on? While it has previously been discussed for the capital, currently London lacks the powers to levy such a tax. However, it could be that Mayoral hopefuls make fighting for the power a key pledge in the run up to May 2024.
While the capital is generally experiencing a bounce back, Canary Wharf is feeling the impact of changing demands for office space since the pandemic. HSBC has now announced is to leave its 45-storey tower to move to a new home in the City, following in the footsteps of a number of other banks which have said that they are to downsize their offices or leave the area entirely.
The clock is ticking as London draws ever closer to the next Mayoral election. For incumbent Sadiq Khan, another win would mean a historic third term for Tooting’s own. Naturally, many politicos and experts have begun their analyses of Khan’s offer to London, with new polling from Redfield & Wilton the latest window into how Londoners view their Mayor. Overall, Khan holds an impressive approval rating (53% approving of his performance, 26% disapproving). On standing for a record third term, twice as many Londoners back this (half, versus 25% opposing).
Keeping Team Khan on their toes will be the revealing finding that a majority of Londoners (56%) would support the Mayor standing aside and a new Labour candidate contesting the election. Interestingly, 58% of Londoners would also support a two-term limit to the Mayoral office, but this leaves us wondering if this is because people think there’s already a term limit!
LONDON PLANNING ROUNDUP
- The City of London Corporation’s consultation and engagement for its City Plan Review are ongoing, with highlighted plans including adopting a ‘retrofit first’ policy and the creation of appropriate zones for buildings above 75m (which some have interpreted as a curb on the proliferation of tall buildings). Further discussions on a ‘fast-track’ for applications to convert older office buildings into public and commercial space are also being considered.
- Lendlease has received planning permission from Lewisham Council to develop 405 homes and 382 student accommodation spaces at Deptford Landings. The site includes tower blocks of between 6 and 29 storeys, with 35% of the homes allocated as affordable.
- Leading heritage group the Victorian Society has added Liverpool Street Station to its ‘highly endangered’ buildings list.
- Mackenzie Homes has submitted plans to Hounslow Council to deliver 210 homes (67% affordable) in two buildings in its town centre. The buildings, rising from 10 to 16 storeys in height, would also deliver 1350m2 of retail and flexible commercial space.
- Richmond Council’s new Local Plan has been published for public comment ahead of its submission to the Planning Inspectorate for inspection.
- Antonia Jennings has been announced as the new Chief Executive of think tank Centre for London. Jennings is currently Associate Director of the Centre for Local Economic Strategies (CLES) and is set to take on the role from September.
- The entire RICS Standards and Regulation Board has resigned.
- The Conservatives have selected a number of London Assembly candidates: Cllr Eleanor Cox for Merton and Wandsworth, Kieran Terry for Greenwich and Lewisham, Callum MacGillivray for Enfield and Haringey, Stefan Voloseniuc for Brent and Harrow and Ronnie Mushiso for the South West.
- Cllr Jonathan Hulley, a councillor in Surrey, has been selected as the Conservatives’ candidate to contest Twickenham at the next General Election.
Speaking of people moves… Dylan Jones has only been editor of the Evening Standard since 5 June but he’s already got a few punchy front pages on ULEZ, cost of living, Keir Starmer and the Tory mayoral selection under his belt. With the paper historically a major influence on the city’s political agenda (particularly the 2008 Mayoral contest), seasoned politicos and campaigners will be watching to see if Jones’s arrival heralds a broader change in the stance of the Standard. Before Jones took over, the paper had backed Sadiq Khan on one of the most controversial issues of the moment, the expansion of the Ultra Low Emission Zone (ULEZ) and City Hall will no doubt be hoping this continues. Yet, with circulation figures down from 0.9m in 2014 to 0.3m in June this year (and down 30% in just the last twelve months), driven by changing working and commuting patterns and competition from other sources of news, the question will be whether the Standard’s opinion hold as much sway as it once did. An interesting test will be whether the endorsement of the Standard in next May’s battle for City Hall is as highly prized as in past elections.
With Parliament heading towards summer recess, Michael Gove and his team have been quietly tinkering at policies. With the DLUHC capital budget locked tightly by the Treasury, it’s given ministers the space to focus on modest changes instead of groundbreaking announcements. Here are just a few of the Department’s recent stories:
- Following an investigation by the i which found that housebuilders are sitting on over a million vacant plots of land, many of which already have planning permission, Gove said that it was ‘unacceptable’ and that he expects developers to ‘play their part in delivering affordable housing’.
- Homes England has announced changes to grant funding from the Government’s Affordable Homes Programme to enable funding for replacement homes alongside its preliminary focus on new affordable housing. The move has been broadly welcomed by housing groups and developers.
- Homes England has also been earmarked for independent review as part of the Cabinet Office’s programme of reviewing all its agencies. The review will focus on its efficiency, governance and effectiveness in delivering policy. Former partner at PWC, Tony Poulter, will lead the review.
- DLUHC has opened its technical consultation into the implementation of high street rental auctions, a policy expected to be introduced as part of the Levelling Up and Regeneration Bill. The measure would allow local authorities to auction leases to vacant properties.
MORE LABOUR POLICY
With the latest polling giving the Labour Party a 25-point lead over the Conservatives, the Shadow Levelling Up Secretary has been setting more of her Party’s offer to the electorate. In an interview with The Telegraph, Lisa Nandy said that a Labour Government would boost housebuilding by asking combined authorities to identify and declassify ‘poor-quality’ parts of the green belt so that they can be used to deliver housing, without compromising ‘green open spaces’. She also said that the delivery of new homes would be facilitated by the creation of more development corporations. Speaking this morning at the Housing 2023 conference, Nandy spoke about her Party’s ambition to ‘jump-start’ housebuilding by reinstating those targets scrapped by the Prime Minister at the end of last year. Nandy also reiterated Labour’s commitment to retaining Right to Buy, giving first time buyers ‘first dibs’ on new properties, while she also signalled that in Government they would not introduce rent controls, calling them a ‘sticking plaster’, which risks opening up a major policy difference with the Mayor of London (and his Manchester counterpart), both of whom have called for more powers to introduce controls in their areas.
LONDON CLIMATE ACTION WEEK
While the latest annual report from the Climate Change Committee provides a worrying view of a future without adequate climate action, in the capital regional and international stakeholders assemble at the Guildhall to share knowledge and build understanding of the challenges facing London. The creative worlds of art and culture and fashion have also hosted exhibitions across the city to harness the visual world in an effort to support LCAW. Meanwhile, at City Hall, the Mayor of London used his position as Chair of the C40 Cities Network to announce a $30m programme to tackle air pollution in global cities. Backed by UN Special Envoy on Climate Ambition and Solutions, business leader Michael R. Bloomberg, the programme aims to improve research, engagement and knowledge sharing to improve air quality and public health. For the built environment sector, the impetus for integrating climate change policy into development has never been more important. This is also the view of the UK Green Building Council (UKGBC) who have issued new guidance to empower the industry to reduce emissions and embodied carbon.
GLA Economics has produced a report on London’s culture sector finding that the Arts Council England funding changes are ‘significant and potentially damaging’. The report found 25% of organisations in London are to lose their grant funding, while 10% will have to leave the capital to survive and moving organisations outside London does not necessarily contribute to ‘levelling up’. The Mayor has called on the Government to ‘ensure that meaningful support is made available nationwide’. In positive news, the highly anticipated reopening of the National Portrait Gallery is receiving plaudits. The new-and-improved Gallery includes a redisplayed collection, new public spaces and a new learning centre, as well as a new entrance and forecourt. Meanwhile, Wandsworth Council has announced that it will bid to be London Borough of Culture 2025. The initiative, launched by the Mayor of London in 2017 to celebrate culture and bring communities together, providing funding for the winning borough to run a year-long programme.
THE DAVIDSON PRIZE
The theme of this year’s Davidson Prize, ‘Somewhere to call home’, asked multi-disciplinary teams to come up with the design for a home community for people who have experienced homelessness and housing insecurity. The winning team is Helping Hands, a coalition of organisations and individuals led by architects Studio MUTT and researchers Neighbourhood. Their proposals include using vacant land in Liverpool to provide a ‘nurturing communal landscape’ as well as shared accommodation geared towards young people who have just left the care system, and individual homes for those who want a greater sense of independence. The Davidson Prize is an annual competition named after Alan Davidson, pioneering architect and founder of Hayes Davidson, who died in 2018.
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