Affordable Housing Plans in London and New York: Between Marketplace and Social Mix

Abstract

The article reviews and critically analyzes contemporary housing policies and plans in London and New York in the context of neoliberal urban governance. In both cities, we find severe housing affordability problems, an increasing dependence on market provision of affordable housing, and a gradual shift from supporting low- and moderate-income residents to promoting housing for households around and above the median income. Affordable housing plans in both cities also link their “marketplace” orientation to “social mix” objectives. The article addresses some socio-spatial implications of these plans and raises concerns regarding the implementation and unintended consequences of mixed-income housing. The conclusion discusses ideas and tools for more equitable affordable housing policies. Finally, we suggest that our analysis of the policy trends in London and New York and the implications we draw may be relevant to other global and globalizing cities, which face similar affordability concerns and rely on the marketplace to address housing needs.

Keywords::

• Housing policy
• affordable housing
• comparative housing
• mixed-income housing
• intermediate housing
• neoliberal urban governance

Acknowledgements

Nathan Marom thanks the Lady Davis Fellowship Trust for a post-doctoral fellowship at the Center for Urban and Regional Studies, Technion, that allowed the accomplishment of this research. The authors acknowledge the help of Rachelle Alterman, who shared her knowledge of affordable housing policies, and Alan Mallach, who read an early draft of the article and provided helpful comments. The authors also thank the editor and three reviewers for their important comments and suggestions.

Notes

¹ For a discussion of different definitions of affordability, see Bramley (2006).

² Unless otherwise stated, we use “New York” throughout this article to refer to “New York City.”

³ In 2009, the average house price in London was nearly £300 000, compared to £200 000 for the UK. By late 2013, it was £438 000, 175% higher than the England average of £248 000 (GLA, 2009, p. 11; GLA, 2013, p. 8).

⁴ The grant available for housing associations to provide social rented homes was reduced from an initial 100% of capital cost to an average of 60% in 1988, and then to an average of 30% in 2000 (Bowie, 2010).

⁵ Social housing waiting lists nearly doubled in a decade: in 2008, over 350 000 households, almost 10% of the total in London, were on local authority waiting lists (GLA, 2009, pp. 22–23).

⁶ In England, the share of intermediate market homes within new affordable housing supply increased significantly, from only 13% in 1991/1992 to 41% by 2008/2009 (Crook & Whitehead, 2011, p. 6).

⁷ Most intermediate market home purchasers in England came from outside the social rented sector, over 90% were in work, and only 6% had children. The proportion of existing social rent tenants who purchased intermediate housing fell from 22% in 2002 to 6% in 2009, probably reflecting rising costs (Crook & Whitehead, 2011, p. 7).

⁸ Previously, more than half the cost of building social housing was met from government capital grants, but under the new policy this will drop to 10–20 per cent; the average amount of government funds provided toward the cost of each social home in London will be cut from £115 000 to around £30 000 (Hill, 2011).

⁹ “Providers will be expected to deliver a range of rents across their development proposals”; yet, “it is expected that most will be let at, or close to, the 80% limit” (Homes and Communities Agency, 2011, p. 47).

¹⁰ Similarly, research on the early impacts of the LHA reforms (Department for Work and Pensions, 2013) shows far more marked impact on the London housing market than elsewhere in the UK, with the number of new LHA claimants reduced most sharply in London's central areas.

¹¹ London was more successful in “mixing” than the rest of the country. In England, between 1998 and 2008, about a third of all new social rented homes were constructed in the most deprived areas, whereas a decreasing share was constructed in more affluent areas. At the same time, a growing share, from 15% to 42% of all new social rented homes, was constructed in new residential areas (Crook & Whitehead, 2011, p. 31).

¹² The LHS 2013 revision states that over 100 estate regeneration projects are underway across the capital and will include over 35 000 new and re-provided homes over the next 10–15 years. A sample of the largest projects suggests that over 20 000 homes could be built over the next 15 years, out of which approximately 15 000 (75%) would be private sale homes (GLA, 2013, p. 41).

¹³ The median sale price for a home in New York at the end of 2012 was $786 000 ($1 370 000 in Manhattan), compared with $257 000 in the USA as a whole (Pereira, 2012).

¹⁴ The New York City Housing Authority was established in 1934 as a public corporation with a charter to build, acquire, and operate housing for low-income households (Marcuse, 1986) and has been active since then.

¹⁵ Of the nearly 85 000 new units (new construction and “gut rehabilitation”), approximately 40% were planned for middle-income tenants, 20% for moderate-income, 20% for low-income, and 19% were set aside for the homeless (Harloe et al., 1992, pp. 195–196).

¹⁶ While this paper was under review, Mr Bill de Blasio, the new Mayor of New York City, announced his ambitious plan to build or preserve 200 000 affordable units in 10 years. One of the far-reaching elements in this plan is to require builders of new affordable units in rezoned areas to keep those units as “forever affordable” (New York Times, May 5, 2014).

¹⁷ Diversity in residential areas is defined in the London Strategy (and in the UK planning policy) in terms of “tenure mix,” whereas New York's NHMP (and the US planning policy) refers to “mixed-income housing.” Despite this difference in terminology, our reading of the relevant literature suggests that “tenure mix” in London and “mixed-income housing” in New York are directed at similar goals: reducing the social exclusion and spatial segregation of disadvantaged residents. The different terms are related to the difference in the distribution of housing tenures in the two countries. In the 1970s, when these policies became common in the public discourse, public rented residences constituted close to a third of all housing units in the UK, and the clear trend was toward growing disparities between the income and living standards of their tenants and all the rest (Harloe, 1990); therefore, tenure mix was considered as a solution to social exclusion. In the USA of the same time, where public housing constituted just 1.5% of the housing stock, concentrations of poverty were found mainly in the inner city, while the suburbs were almost “clean” of poor residents (Wilson, 1987); hence, mixed-income areas of residence were suggested as a solution.

¹⁸ Competition for the units is fierce: according to city officials, there are as many as 100 applications for each available apartment, and 60% of applicants fail to qualify from the outset (Santora, 2011).

¹⁹ Thus, in the run up to the May 2008 mayoral elections in London, both candidates—Johnson and Livingstone—published housing manifestos, which put the issue of affordability at the center of their campaign (Bowie, 2010), as did Bloomberg in his three election bids in New York.

²⁰ This is supported by both policy and research. The US National Commission on Severely Distressed Public Housing (1992) recommended preservation of existing stock over demolition and redevelopment. Empirical studies such as the longitudinal research of public housing in Boston by Vale (2002) supported improvement and renovation of existing housing and argued against demolition and redevelopment. Demolition often destroys more low-income housing units than the redevelopment provides, at least on the sites of the old housing, in addition to hurting households and communities, for which Goetz (2013) provides many examples.

²¹ This method seems especially relevant to the recent housing plan announced by New York Mayor Bill de Blasio, which promotes housing densification as a way to increase affordable housing supply. A viable regulatory reform that enables user-controlled densification without displacement (TAMA 38) is currently being implemented in the globalizing city of Tel Aviv and other large cities in Israel. It is analyzed in forthcoming papers by Shlomo Angel (NYU) and Naomi Carmon (Technion).