For the first two weeks of each month, tens of thousands of Londoners work to pay their landlord’s mortgage.
Average rents in the Capital now amount to half of monthly wages. In the past year, house prices in London have increased on average by £60,000, which is double what the average Londoner earns in a year. Or to put it another way: the homes many of us pay half our wages to live in are earning money at twice the rate we are.
It’s getting ridiculous now.
Everyone knows we need more affordable homes, and Labour mayor Sadiq Khan, elected in May, has pledged to deliver them. But the question is, how?
In East London, a group of local people, supported by the Greater London Authority (GLA) and the community organising network London Citizens may have arrived at a solution.
At a former local hospital in Bow, in East London, the London Community Land Trust are pioneering an alternative model of housing – a Community Land Trust (CLT). Community Land Trusts are organisations set up and owned by ordinary members of the local community, with the purpose of developing and delivering homes at a price that people can afford.
The price of homes in a community land trust are set based on average earnings in the area rather than by the market. In somewhere like Bow, that’s about £200,000 for a 2 bedroom flat, compared to the market rate of closer to £700,000. And unlike other forms of affordable housing – which are often soon sold on at a much higher price – these homes stay affordable and linked to average local wages for forever.
Too good to be true? Here’s how it works. At first, the money to build the homes in a community land trust is raised through a combination of loans and from local people, via a community share offer, with local people such as pensioners and existing homeowners able to invest in the scheme and expect a fairly predictable rate of return. The Land Trust itself is run as a co-operative, with anybody in the local area able to become a member, and to have a say in how it is run.
The homes newly-built by the trust are then sold to people based on certain application criteria, such as living and working locally, earning a certain level of income, being a key worker (such as a teacher or nurse), and being interested in playing an active role in the life of the local community. The price of the home is fixed to local wages – ensuring a good mix of people from a range of backgrounds, the foundation for an active and vibrant local community.
And when those homeowners are ready to move on, their original contract stipulates that their home will be sold on at a price linked to current local average earnings – meaning that while the current owner will make a reasonable profit, their home will also continue to remain affordable for people in the local area and for the next person who owns it.
Because ultimately, the only way we fix this housing crisis is through a shift in mindset, away from the kind of society in which houses are viewed as financial assets, to one in which houses are viewed as homes. Not a pot of cash or a get-quick-rich scheme for those lucky enough to have a lump sum as a deposit and tenants to pay their mortgage, but a place to have a life, a family and to build a community.
Earlier today, we visited the St Clements development in Bow to see the homes under construction and the development taking shape. The first residents move in in September, and we’ll be there at the launch to show you the finished project and hopefully to speak to some of those lucky enough to be moving in.
But in the meantime, spread the word: there’s a way to make housing work for all of us. Let’s get to work making it work – not just in Bow, but across the whole country.