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Micro-homes central to inner-London living says Adam Smith Institute

• Micro-homes could help new, younger Londoners move into flats in the city centre close to places of work and leisure

• Design and liveability requirements should be kept, while floor space requirements scrapped, to green light a new wave of innovative development

• Average house price is 5 times higher than 50 years ago

• In the past 20 years London’s population has grown by 25%, but the number of homes by only 15%

• By 2025, 3.5m Londoners will be living in rented housing, with 79% of adults moving to London in the last year renting

• On average 1/3rd of income is spent on housing, up from 1/5th just 15 years ago

• The upcoming GLA ‘London Plan’ should remove minimum space requirements for co-living units and micro-homes, while retaining the demand that they are “appropriately sized to be comfortable and functional for a tenant’s needs”

It’s not size that matters in housing, it’s how you use it.

Restricted supply of new housing has meant sharp rises in house prices and rents in central London in recent decades, with young Londoners priced out of the market. Micro-homes are purpose designed flats with floor space below 37sqm that make innovative use of space to expand choice available to many Londoners open to living in smaller, but more personal and private apartments.

Micro-housing is not the same as cramped sub-division of existing units, they are smart, modern, custom designed units that make good use of space which have won prestigious architectural awards. Micro-housing is often accompanied by communal amenities such as games rooms and open living spaces that help address loneliness.

Report author and urban policy researcher Vera Kichanova stresses that while micro-housing is not a panacea or a replacement for planning reform, it could be a partial solution for those in cities like London that want to live close to where they work, as well as close to bars and restaurants.

In London this means living in what the Greater London Authority calls the Central Activities Zone. Stretching from King’s Cross in the Northeast of the city to Battersea in the southwest, this area alone is home to 1⁄3 of all jobs in the capital and generates 10% of the UK’s GDP.

With 79% of adults moving to London in the past year in rented accommodation, being younger and with less disposable income than older generations, and with rents taking up an average of a third of their income, micro-homes in could be the only chance to stay within the Central Activities Zone.

Without micro-homes many Londoners are forced to pack into crammed peak hour commuter trains, are forced to share living space with complete strangers, or leave the city altogether.

Ms. Kichanova lays the blame for all of these squarely at the feet of government—specifically the Town and Country Planning Act 1947. By requiring local or central government permission for building projects, the Act detached house prices from just the cost of construction and tied it heavily to a price for land that was heavily rationed.

A previous report by the campaign group London YIMBY for the Adam Smith Institute had found London rents have been inflated by over 300% due to planning restrictions with over 75% of the cost of development coming from planning red tape.

A green light to innovative development could help London become a denser, more liveable city for its increasingly younger and dynamic residents by providing a choice that fits their individual requirements in the world’s most diverse city.

The Adam Smith Institute’s Head of Research Matthew Lesh said:

“Small, but perfectly formed micro-homes would expand choice for young Londoners. There are many who would rather live close to the city centre, in a building full of amenities such as game rooms and co-working spaces, rather than spending hours commuting every day.

London’s housing crisis is not just an economic problem, hurting growth because people cannot live where they would be most productive, it is also having very real and serious political ramifications. The lack of housing affordability is leading many to lose faith in the entire free market system.

Housing policy reform is an urgent priority, and while micro-housing is no substitute for fundamental planning reform, it is an important first step.

For further comments or to arrange an interview, contact Matt Kilcoyne, Head of Communications, at matt@adamsmith.org | 07584 778207.

The Adam Smith Institute is a free market, neoliberal think tank based in London. It advocates classically liberal public policies to create a richer, freer world.