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Micro-homes: could they solve the first time buyer crisis?

A think tank is suggesting that micro-homes could be the answer to London’s shortage of available homes for first time buyers.

The right-leaning Adam Smith Institute says current design and ‘liveability’ requirements for new homes should be kept but floor space requirements should be radically altered to allow what it calls “a new wave of innovative development.”

The think-tank’s suggestion is that the upcoming Greater London Assembly’s London Plan should remove minimum space requirements for co-living units and micro-homes, while retaining the requirement that they are “appropriately sized to be comfortable and functional for a tenant’s needs.”


The institute’s definition of micro-homes says they are “purpose designed flats with floor space below 37s square metres that make innovative use of space to expand choice available to many Londoners open to living in smaller, but more personal and private apartments.”

It stresses that micro-housing is not the same as cramped sub-division of existing units, but instead “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.”

The call is prompted by statistics drawn up  by the institute, which suggest that London’s average house price is now five times higher than 50 years ago, and that in the past 20 years the capital’s population has grown by 25 per cent while its housing stock has increased only 15 per cent.

It claims that by 2025 some 3.5m Londoners will be living in rented housing, with 79 per cent of adults moving to London in the last year renting; on average about one-third of a London resident’s income is spent on housing, up from a fifth just 15 years ago.

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 to Battersea, this area alone is home to a third of all jobs in the capital and is claimed to generate 10 per cent of the UK’s GDP. 

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. 

Kichanova lays the blame for all of these at the feet of government—specifically the Town and Country Planning Act 1947. 

By requiring local or central government permission for building projects, the institute claims the act “detached house prices from just the cost of construction and tied it heavily to a price for land that was heavily rationed.”

The Adam Smith Institute’s head of research Matthew Lesh says: “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.”

  • Brit Miller

    The problem is continued emergency interest rates that are inflating property prices. Put them back up to 5% and home prices will fall to affordable levels.

    • 22 January 2020 14:42 PM

    Nah! you are wrong.
    Such is the demand from immigration and organic demand there are still too few properties for sale.
    Prices might not increase if IR increase but they certainly won't reduce.
    People simply wont sell if they don't have to.
    Obviously the three D's will still be there for sales.
    Such sales are a minor part of sales though.
    IR are reducing soon.
    It will be at least a decade before IR increase anywhere near 5%
    Of course lenders already charge such rates.
    So 5% is already here.
    Lenders pay little attention the BBR.
    If it reduces lenders just increase their SVR differentials.
    The consumer doesn't feel the benefit of BBR reductions.
    Lenders just use it to boost their profits.
    Until the borders are closed and millions more properties are built property prices will remain as they are or increase.
    Forget any idea of reductions!


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