New Home Approvals in London Recovered Pre-Brexit

Ahead of June’s Brexit vote, new home approvals in London recovered from a former drop, reaching 6,310 in the second quarter (Q2) of the year. However, the latest London New Homes Monitor from Stirling Ackroyd claims that this progress could be short-lived.

Out of a possible 8,280 news homes that could have been approved in Q2, 6,310 – or 76% – were granted permission. This marks a 46% quarter-on-quarter improvement on Q1, which saw 4,300 new home approvals in the capital.

Westminster proved the most proactive London borough for new home approvals, with 1,720 given permission. Overall, the inner borough authorised 99% of all new home applications it received.

The Managing Director of Stirling Ackroyd, Andrew Bridges, says: “London has had a tough time lately, as Brexit injected a dose of uncertainty into the property market. In spite of this, the number of new home approvals improved in the run-up to the result. There may still be an impact to come, but for now, this pick-up is a sign that London’s property market is resilient. It’s a new game of unknowns – and London could emerge a winner.

“Westminster is soaring ahead in terms of approvals and applications, but these are unlikely to be affordable for the typical Londoner. Many in the capital are left feeling let down as affordability drives them further away from a home of their own.

“A new Housing Minister means new rules though, and London could be set for a shake up. The revival of a Minister for London could bring some reassurance to developers and buyers, who are hoping for a pro-building Government under Theresa May. Realistically, however, it’s more likely to be business as usual.”

New Home Approvals in London Recovered Pre-Brexit

Despite a pick up in approvals in Q2, the quarterly improvement trails behind the levels recorded in Q2 last year.

Q2 2015 saw 8,063 new home approvals, out of a possible 10,662. Annually, the rate has dropped by 22%.

Bridges continues: “We keep on hearing negativity when it comes to housing in London; not enough space, not enough money, too much Nimbyism. In fact, there’s plenty of room and sufficient progress isn’t being made on a yearly basis. Our research suggests space for up to 570,000 across the next ten years. Sadiq Khan may be keen to protect greenbelt sites, but good development is possible there too, and we need to think the politically unthinkable to solve the housing crisis.

“There’s a clear and difficult road ahead to solve London’s housing deficit. A big challenge is how to ensure the Government’s promise of one million new homes and Sadiq Khan’s promises of over 50,000 in London are delivered now Brexit is a reality. A more efficient planning system is the place to start. Crucially, planning reforms are still on the Government agenda for now – and they need to stay there.

“Overall, more resources and time need to be committed to achieve the number of new homes London needs. Having a new home can transform lives and London has always been an aspirational city.”

The London Borough of Newham rejected a huge 92% of possible new homes in Q2, recording the lowest Greater London approval rate, and meaning that just nine new homes were approved over a three-month period.

Comparatively, the London approval average was 76% in Q2, with just 13 out of 33 boroughs surpassing this level. However, this is an improvement on Q1, when the average approval rate stood at 61%.

Behind Newham, Bromley approved just 23% of all new home applications, while Islington approved a surprisingly low 36% of potential new homes.

However, Merton’s planning department approved 88% of new home applications, and the east of London saw a boost to its new build developments, with Tower Hamlets approving 87% of new home applications, alongside Havering.

Bridges concludes: “The east of London appears the most reliable area when it comes to tackling London’s housing crisis. Planning is more lenient, there’s less resistance to new developments, and the area keeps growing in vibrancy and significance to the London economy. East London’s impressive tech sector is just a starting point, and success will continue to ripple around the surrounding locales. More and more, people are wanting to live in Shoreditch, Dalston and Hackney Wick, and this enthusiasm is driving developers to the area.

“It’s great to see overall progress, but certain boroughs are slowing things down – Newham has seen a rigid approach to planning in Q2, which will need to be reversed if a consistent approach is to be enacted across London.

“Again, the ugly inner/outer divide has reared its head, with outer London remaining defiant against new homes and new developments. Unfortunately for London, consistency is key to solving the planning equation. If planning departments are to embrace a new strategy, some tough love from central Government might be needed. And Gavin Barwell may be the man to do it – only time will tell.”

Landlords, with new developments cropping up consistently, east London may just be the right spot for you to invest in. Here’s why you should buy further east: /why-landlords-should-buy-in-east-london/