Mayor of London, Boris Johnson is calling on the Coalition Government to allow London to retain all stamp duty receipts raised on its property sales, estimated to be worth £1.3billion a year, to ensure it can build the million homes that London will need by the mid 2030’s.
Just as the UK economy cannot grow sufficiently without investing in its infrastructure London ‘s economic growth and global competitiveness will be threatened without the homes it desperately needs to secure long term stability and prosperity.
The Mayor’s proposal would give the capital a stable income stream to create a 25-year plan that will not just solve its housing needs but would create hundreds of thousands of long-term jobs and give a massive boost to its economy benefiting the whole of the UK .
In a keynote speech to the Chartered Institute of Housing the Mayor told members that London could not rely solely on a “planning-led” system which has delivered only half the number of homes needed for 20 years.
He believes that London, not Whitehall , is best placed to address the problem having already proved itself with a record number of over 50,000 new affordable homes built in his first term and the introduction of innovative programmes to meet the different needs of Londoners under the Mayor’s Housing Covenant.
In addition, since his re-election in May 2012 more than 100 hectares of public sector land, equivalent to twice the size of London’s Soho district, has been released to the market giving the capital’s economy a £1billion boost.
Stamp duty, the tax on London’s successful but overheated housing market, should now be used to offset the costs of that success. With the majority of Londoners paying at least 3% stamp duty and new levies on homes costing over £2million focused largely on central London, it is increasingly becoming a London tax.
The Mayor argues that it is right that London should retain this revenue for the benefit of Londoners who will drive the growth that will lead Britain to increased economic prosperity. This would be in line with the coalition Government’s cornerstone policy of localising spending and returning power and decision making to the regions especially when Scotland will retain its Stamp Duty receipts from 2015 and Wales is likely to follow suit in the future.
Devolving stamp duty of £1.3billion annually back to London is vital when UK capital expenditure is so constrained and with no housing settlement yet agreed beyond 2015.
It would enable City Hall to borrow on the capital markets against this key revenue stream for the investment it needs help stimulate infrastructure investment to unlock housing growth, kick-start the many stalled developments in the city and make longer-term commitments to regeneration of existing housing estates.
It would also be crucial in creating and underwriting a range of new housing products particularly important to help those Londoners who contribute so much to the London economy but are struggling to get a foot on the home ownership ladder.
The Mayor’s stamp duty “ask” of the Coalition Government is top of his list of key measures that must be given to the capital to reverse the housing shortage which can only get worse. These include:
* Giving London boroughs more freedom to build homes .This would include removing the borrowing limits on town halls which severely restricts their ability to deliver new homes;
* Giving housing associations long-term certainty to build affordable and market homes;
* A new affordable housing settlement for London from 2015 with rents reflecting incomes and within housing benefit levels;
* Demonstrating how purpose-built, custom-designed private rented homes can accelerate delivery on three GLA-owned sites;
* The transfer of surplus government land to City Hall to maximise development opportunities;
* Test a new graduate-style housing product to encourage major employers to invest in accommodation programmes to help attract staff;
* Launch a new City Hall initiative with developers to identify housing schemes for the London Pension Fund Authority to consider for investment – an opportunity which would be extended to other pension funds.
Johnson, said: “Since I was elected London ‘s population has grown by 600,000 and is forecast to rise by a further million at least over the next 25 years. If we do not come up with a new plan to build the homes we need, this great city will suffer and the whole country will feel the consequences.
“What is needed now is a radically different approach which optimises City Hall’s role, unlocks the potential of the capital’s boroughs, allows developers including housing associations to up their game and creates a stable supply of land for housing. Above all, London needs a stable funding stream which will support and accelerate its housing and infrastructure delivery.
“Even in the toughest of economic times London has shown that with fresh thinking it can deliver, with record affordable house building figures in my first Mayoral term. So I am calling on the Coalition to give us the tools and we will solve the crisis, supporting and creating hundreds of thousands of jobs and boosting economic growth across the UK along the way.”