“The size limits will ensure we make the best use of space. We know we have to provide homes for nurses, teachers, police and other workers. No more Russian oligarchs buying up Nash-designed terrace townhouses overlooking Regent’s Park.” - Councillor Richard Beddoe
It’s quite the statement, isn’t it.
Westminster is big, green and as of April this year, possibly now suffering from Dissociative Identity Disorder.
Though, when thinking of big green things with multiple personalities, something else comes to mind. Bruce Banner? The physically weak, socially withdrawn, and emotionally reserved physicist also known as his alter ego, The Incredible Hulk.
Stick with me.
Westminster covers nearly 21.5 square kilometres of central London, with over 850 acres of Royal Park. Big. Green. It also includes within its borders an incredibly diverse range of areas, from places like West Kilburn and Victoria, through to Belgravia and Mayfair.
Back in 1997, I spent rather less time than I should have sitting in an A-Level economics class, taught by Mr Harman.
Twenty odd years before Brexit was a thing, he was discussing the difficulties of setting interest rate levels across diverse territories, each of which had unique economic circumstances. If my memory serves me right, illustrating this by comparing Frankfurt to Naples.
Housing policy faces similar challenges. Belgravia, Mayfair, Marylebone, St James’s, Soho, Regent’s Park, Little Venice and St John’s Wood are all neighbourhoods which are synonymous with high fashion retail, Michelin starred restaurants and large, expensive homes.
The flip side? Currently only 1.5% of Westminster housing is accessible to those who are not eligible for social rent, but cannot afford market rents or prices.
Which is a problem, but perhaps not a surprising one given the proportion of the borough taken up by some of the locations mentioned above.
Westminsters solution? 1,495 new homes every year for ten years. 1,850 new affordable homes by 2023.
Oh, and no more newly constructed homes larger than 200 square metres, or around 2,150 square feet. If you were wondering, this isn’t a suggestion, as of April this year, it’s policy.
It’s fair to say that when it was first mooted back in June 2019, the proposal caused a fair amount of consternation amongst both property developers and estate agents.
Except in circumstances “where it is necessary to protect a heritage asset” there will be no more development of large, lateral apartments. No more development of large, single use family homes. For at least 20 years. No one can accuse Westminster of being anything less than radical here.
The possible implications?
It’s no secret that the prime central London property market has been through a fairly torrid time of late, with many analysts calling the bottom of the market earlier this year.
According to Savills, prices are over 20% down on their 2014 peak. The marginal growth of +0.4% in the first four months of 2021 perhaps marks the beginning of the projected recovery.
It’s not just prices which have been affected, transactions are down too. Quite substantially.
Whilst clearly not the primary aim of the policy, it would seem natural that a reduction in supply could actually be a positive thing for values, and transactions too. In the words of Mark Twain (more or less);
“Buy prime central London property, they’re not making it any more”
In addition to this, Westminster already has more than its fair share of prime and super prime homes, so perhaps the change will force property developers to think more creatively.
We could conceivably see more mixed use, placemaking schemes which combine smaller, private homes with affordable housing, and an eclectic assortment of retail and restaurants.
I was in South Bank yesterday, looking at properties for a client. The regeneration there has, to my eyes at least, been a resounding success. More of this kind of development would certainly be a welcome addition.
Of course, a society where everyone has access to good quality housing is something that most people would consider desirable, and I hope that Westminster is able to succeed in its ambitious plans.
Although, for all of my positivity about the benevolent desire behind the policy change, I am also reminded of a quote by Nassim Taleb.
“Bureaucracy is a construction by which a person is conveniently separated from the consequences of his or her actions”
Can Westminster be both Bruce Banner and The Incredible Hulk? One thing is for sure, it will be incredibly interesting to see what the borough looks like by 2040
Data compiled from Prime Resi & Savills
Things I’ve been inspired by this week
I spoke last week about Naval Ravikant. I’m not a quick reader, but the relatively short, incredibly easy to read collection of his musings was brilliant, and I couldn’t put it down. Here’s a couple of excerpts for flavour.
On external validation
“He (Warren Buffett) has a great example when he asks if you want to be the world’s best lover and known as the worst, or the world’s worst lover and known as the best? All the real scorecards are internal”
“Happiness is a choice you make and a skill you develop. Desire is a contract you make with yourself to be unhappy until you get what you want”