Why outer London is struggling to meet its housing needs
Sixty per cent of Londoners living in poverty are now in outer London, with affordable housing in short supply. Paul Hunter outlines the findings of a new report
Picture: Getty
Sharelines
Outer London is showing serious signs of impoverishment and struggling to provide affordable housing and quality jobs for local people.
A new report, published today by the Smith Institute and supported by Trust for London, suggests that many outer London boroughs are in danger of being “left behind”, with attention overly focused on the economic success of the inner city and commuting to work.
As the mayor prepares his new 20-year spatial plan for London, our report – titled The unspoken decline of outer London: Why is poverty and inequality increasing in outer London and what needs to change? – calls for increased investment in affordable housing and mixed communities in outer London. It also questions the merits of multibillion-pound transport projects that disproportionately benefit inner London.
“Local people feel ‘priced out’ and angry about the lack of affordable housing and the cost and inconvenience of travelling long distances to work”
The evidence gathered by the institute for Trust for London shows that ‘city centralism’ is displacing poverty – and crime – into outer London and undermining efforts to deliver inclusive, more balanced growth.
While outer London boroughs, such Barking and Dagenham, are embarking on exciting major regeneration programmes, low-income households interviewed for the research say new developments are not helping them. Local people feel ‘priced out’ and angry about the lack of affordable housing and the cost and inconvenience of travelling long distances to work.
Poverty levels are in fact rising in outer London, while they have fallen in inner London. Inequality is also on the rise, and more areas in outer London now rank among the most deprived in London.
Unemployment rates in outer London, which historically were lower than inner London, have now converged. Inner London has created hundreds of thousands of new jobs, while jobs per working age population in outer London have declined over the past decade. The outlook is far from promising, with productivity growth in outer London not only lagging behind inner London, but also below the UK average.
House prices, meanwhile, have risen across the capital, but the gap between inner and outer London has widened as those on higher incomes move to the centre, where more of the jobs are located. This has happened at the same time that people on lower incomes have become much more reliant on the private rented sector (PRS), which is now home to more of London’s households in poverty than social housing.
The number of people claiming housing benefit in the PRS is rapidly increasing in outer London, while it is falling in inner London. This trend is being exacerbated by high inner-city rents, the lack of social housing, and welfare reforms, which are forcing low-income families to move.
The decline of outer London presents big challenges. At a spatial planning level, there are questions about whether big infrastructure investments, like Crossrail 2, deliver quality jobs and growth for outer London areas. The fear is that much of outer London will become more divided itself, with poorer areas stuck in a spiral of low wages and low skills.
Key findings from the report:
- 60 per cent of all Londoners living in poverty are now based in outer London, a total of 1.4 million people
- In 2004, outer London had 32 per cent of London’s most deprived areas; by 2015 this had risen to 47 per cent
- The rise in housing costs, alongside welfare reforms, has driven more low-income people into renting privately in outer London
- Housing benefit claims in the private rented sector are up 17 per cent in outer London but down 13 per cent in inner London
- Low pay is increasingly an outer London issue, with rates a third higher in outer London than inner London; 10 years ago, rates were similar
- Outer Londoners spoken to as part of the report stated that they felt outer London was increasingly experiencing similar problems once associated with inner London
Outer London is also struggling to meet it housing needs. As the report documents, with social housing in desperately short supply, more and more outer Londoners are housed in substandard and overcrowded PRS flats.
Radical solutions are called for, such as rent controls and more proactive ‘first dibs’ housing allocation policies. A new approach to estate renewal is also required. As the Smith Institute’s focus group research highlighted, people aren’t so much threatened by new people coming in, but the increased prices that come with this – “it’s the price of rent and the price of food. That’s the problem.”
Taking on board these anxieties may mean ensuring that regeneration schemes from planning to delivery consider the potential affordability of the wider area post-development.
“Without a shift away from the current inner London centric approach to economic development, the long-awaited renaissance of outer London will be pushed even further away”
But building more new homes is not enough. Those on low incomes cannot afford to travel far, and had reservations about doing so. The institute’s data analysis suggests that people in outer London are more likely than inner London residents to be low paid and not in employment.
That needs to change, and social landlords clearly have a part to play in upskilling and helping to provide local jobs.
Housing and employment improvements do not come cheap. But neither do major infrastructure projects. Redirecting some transport funding to support local growth (town centre renewal, new business hubs, more new build social housing etc) and establishing outer London Living Wage Zones would be a positive start.
Securing a step change in investment in local growth in outer London is crucial. But it will demand a change in mindset in both City Hall and Whitehall. Without a shift away from the current inner London centric approach to economic development, the long-awaited renaissance of outer London will be pushed even further away.
Paul Hunter, deputy director, Smith Institute
RELATED
News28 Mar 2025
RSH upgrades landlord to V1 and hands out five C1 grades
News27 Mar 2025
Welfare cuts to affect three million people, OBR says
- © 2025 Social Housing
- All rights reserved