We can’t get away from it; in 2025, London’s housing crisis is probably going to get worse. Young professionals, key workers and creatives are leaving the city in droves due to the lack of affordable rental solutions – rents have risen by 32% since 2019.
If we don’t solve this problem, the city is going to change. It will become increasingly more challenging to function as a vibrant city. We know this first hand at the Lowe Group, as some of our employees have moved north because rents are so much lower. And when people do move out of London, they often find that many areas lack creative work opportunities.
The solution is absolutely not to build the low-grade homes that have been in the press recently, condemned as ‘slums’ in disused office blocks. This is where a lack of understanding about communities leads to disaster.
Instead, the solutions lie in a combination of financial incentives for property owners and creative thinking. Read on for our take on what the government can do to tackle the crisis, before London changes irreparably.
Be prepared: some points might sound controversial. But no one is saying that finding ways to provide affordable rental solutions is an easy challenge to solve.
Relax Minimum Space Standards
There’s no doubt that allowing developers to create smaller units would allow them to deliver more affordable spaces to rent. This concept has been taken up on the sales side for some time, such as by Pocket Living.
We’re not alone in questioning the value of minimum space standards. As Centre for Cities suggests, different people have different needs – some people would be very happy in a much smaller home than others. Dictating the space someone would like to rent might be pricing them out of affording a home at all.
If there were more, smaller, units to rent, this would free up homes for people who need to rent a larger space. If a development is located in a community, with other amenities available, residents might well have everything they need.
Penalise People For Holding Empty Houses
Government figures suggest there are currently almost 700,000 empty homes sitting empty in England. This includes 261,471 ‘long-term empty’ homes – no one has lived there for six months or more. The government needs to address this socially unacceptable waste, just as much as it needs to build 1.5 million new homes.
In December 2024, a cross-party group of MPs wrote a letter to housing minister Matthew Pennycook, calling for the government to introduce a national empty homes strategy. This included a national loan fund to allow councils and developers to acquire and refurbish empty homes.
Another method could be to target property owners through council tax, raising the amount due on an empty home. The onus should fall on the property owner to make sure the building is occupied.
Create More Creative Employment Opportunities Out of London
If we accept that London is always going to be a more expensive place to live than other parts of the country, we need to provide young people with the chance to work in creative industries in more affordable locations. One solution is to make better use of empty commercial spaces.
Currently, businesses often strip vacant buildings down to shell and core to remove rates liabilities while waiting for planning permission to redevelop. No one wins – the government isn’t getting rates, the property owner has no income and life is sucked from the community by wasteful empty space.
Instead, why not allow a more creative use? Commercial buildings sit empty across the country. If there were more creative employment opportunities outside London, people would feel incentivised to move to other locations, rather than forced to.
We help property owners to work with charities, allowing them to occupy the space on a reduced rent. While this gives a guaranteed business rates saving of 80-100%, the artists, musicians and charitable groups we partner with create a vibrant community. The result is long-term gain to a building and its surrounding area.
Target Planning Policies to Provide The Right Support
Labour has already made a start on outlining planning policies to boost the delivery of new homes. To have the greatest impact, the government needs to target policies to help the people who need affordable rental homes most.
Take key workers – can planning departments encourage the creation of homes specifically for these people to rent? Developers need to provide the housing that London and the rest of the country needs, which could be better built into section 106 requirements.
Introduce Affordable Rents Within Co-living
Co-living is relatively new in the UK, but gaining traction particularly for students. The developer is a clear winner – they can achieve the best rents by providing the smallest units, without having to provide any affordable housing.
Why not add a requirement to build units with rents affordable for London as part of planning permission? The result would be a similar mix of tenures that exists within other rental blocks.
There will be opposition to this from developers who argue their business model cannot handle such requirements, as there will be to all the solutions we have suggested. But unless the government acts soon, London’s creative juice will flow out of the city too fast for us to stem it.