Speech to Wandsworth Council by Peter Carpenter, July 2017
London faces a Housing Crisis. When I joined Wandsworth Council in 2010 there were 350 homeless households. This year there are expected to be 1,800, five times as many.
Affordable housing, by which I mean housing affordable to a family on median income, not some spurious figure invented by the Editor of the Evening Standard, is almost unavailable in Wandsworth outside the social rented sector.
Wandsworth Council is failing to achieve its planning target of 35% affordable homes in new developments, most recently accepting a loss of 250 affordable homes in the Battersea Power Station development on the basis of deeply flawed financial calculations.
As a result, rogue landlords are able to exploit some private renters in the Borough by providing unsafe, insecure and expensive accommodation, threatening a return to the Rachman practices of the 1960’s which we thought had been long outlawed.
What is the Wandsworth Tory response to this crisis? This. The Leader’s pathetic paper Building for Wandsworth People. Full of Motherhood and Apple Pie. But no specific action. Indeed the only action Wandsworth Tories took was that two days after the Housing Committee had discussed the Leader’s paper, the Planning Applications Committee accepted a 250 reduction in the number of affordable homes on the Battersea Power Station site. At a stroke they undid the work of over a decade of the Hidden Homes programme.
It is because of the way they contemptuously ignore the needs of Wandsworth people, that I say that Wandsworth Tories are unfit to hold public office. At the Borough Elections next May we will sweep them away.
Why do we want to do this? Not for ourselves, but for the people of Wandsworth. We want to replace the Tory values: for the privileged few, by Labor values: For the Many, not the Few.
As it says on our Labour Membership Card we believe that by the strength of our common endeavours we achieve more than we achieve alone. That is the fundamental difference in our world view. Tories believe in individual greed, Labour in collective need.
In our Manifesto for 2018 we will set out in detail our housing programme to 2022 and beyond, building on the pledges in our 2014 Manifesto and the Housing policies being developed by the Mayor of London in the London Plan.
Mr Mayor, this motion sets out for actions that we can take today, actions which if the Majority Party were a civilised party, they could readily agree to.
First we need to ensure that our housing policies prioritise the needs of local people ahead of the interests of property developers and overseas investors.
Yes, we need property developers and overseas investors, but we need to work in partnership with them. If Hammersmith and Fulham can achieve 50% affordable housing in its riverside developments, so can Wandsworth.
Secondly we need to re-prioritise housing policy to observe the London Plan’s affordability targets and incorporate its aspiration for 50% truly affordable housing in new developments.
Thirdly we need to make sure that deals with developers are fair and enforced. Because the majority of property development is financed by debt the return to equity that the developer receives is much greater than the overall project return of typically 20%.
Let me give you an example. You get a 90% mortgage on a £1m house. You put down £100k and borrow £900k. The price of the property rises at 5% per annum. After four years it will be worth £1.2m, an increase of 20%. You sell it off, pay off the £900 loan and pocket £300k a 200% return on your £100k equity investment.
Property developers do something similar. Though their accounts are opaque, I estimate that even with an overall return of 10% Battersea Power Station will be getting at least a 30% return on its equity investment. We need to adjust our financial evaluations to take this into account.
Finally, while we welcome HMO licensing, we need to expand the licensing of landlords beyond HMO’s to avoid the development of Rachman style practices in the Wandsworth Private Rented Sector.