Looking abroad for the solution

Crippling private rents, a desperately oversubscribed social rented sector and a cultural tendency towards home ownership - these are the issues that set Britain apart from its European neighbours, and contribute to the current accommodation crisis.

The difficulty of housing key workers appears to be unique to the UK because other countries boast a much bigger affordable-rent sector. France, Germany, the Netherlands, Spain and Sweden subsidise private renting, unlike Britain, and the privately rented market offers a much wider choice.

"In London the demand for quality homes outstrips the supply and therefore inflates the market," says Sue Ellenby, head of the London Housing Federation. "This, coupled with the British aspiration to home ownership, makes the capital's situation very different from many of our European neighbours.

"Unlike many cities in Europe, in London it is often cheaper to buy than to rent. Renting is often ridiculously expensive - often more expensive than getting a mortgage - and on top of that, many tenants feel that they miss out on the big equity payouts that homeowners are benefiting from as property prices continue to increase."

However, it is in the US that the UK housing market can perhaps find the most similarities. According to a report published last year by the US Center for Policy Alternatives, lower- and middle-income renters in some urban areas are being priced out of the housing market. This was backed up by the Mortgage Bankers Association of America, which reported that a vast number of moderate-income families are unable to find decent, affordable houses or apartments. In 22 states, a couple earning the minimum wage are unable to afford family housing. The Center for Policy Alternatives report adds that even some government employees are unable to afford to live in the cities and towns where they work. So worried are some local authorities that they have begun to offer subsidies to teachers and police officers trying to buy homes.

The case of Aspen, Colorado, serves as a stark warning as to what could happen in the UK, and in particular London, if nothing is done to create housing for key workers.

By the late 1990s, the hugely popular and upmarket skiing resort was faced with a major housing crisis. The affluent had been buying up the area's properties as holiday homes, leaving those who actually lived and worked there priced out of the market. Average property prices soared to 12 times the national average, until 70% of all private housing was being used as vacation homes.

Aspen had gradually become the victim of its own success and was left without essential teaching, restaurant and hospital staff to run local services. Those who did not leave the area were found living in their cars, and the forest service had to impose a time limit on how long people could stay at campsites, as so many workers had started to live there permanently.

Drastic action was taken. The local authority was forced to introduce subsidised housing for any family of four earning less than $118,000 a year - around ?74,000. Almost half of the town's permanent population qualified for some subsidy, and developers were obliged by the local authority to set aside up to 70% of new homes for affordable accommodation. Under the scheme, a three-bedroom house, which could fetch $3m (?1.9m) on the open market, could be bought for $180,000 (?113,000).

The scheme was a success, and key workers were able to live in the area, but the authority is keen to ensure that the crisis is never repeated. The latest Aspen Area Community Plan, published in 2000, emphasised the need to continue creating a "healthy mix of people with different economic conditions".

The plan's policies included creating 800 to 1,300 more affordable properties, with funding not only from the local authority but also from local businesses and developers. In May 2000, Colorado also passed a law allowing it to clear unsanitary or unsafe housing, and replace it with affordable homes for those on moderate incomes.

Many believe that the strict planning laws introduced in Aspen could well be the state of things to come in UK cities unless the lack of low-cost housing is properly addressed.

"The breaking-point situation that Aspen faced in the 90s should be a warning sign to policy and decision makers in London," says Ellenby. "Just as in Aspen, workers in London are struggling to live and work in the capital, and thousands are looking for a better life elsewhere. Apart from the ever-present need for increased government investment, the only effective way to combat this trend and ensure that affordable housing is provided across the capital is through the planning system. With a limited supply of suitable land for housing in London, each housing development built should contain an element of affordable housing for our workers."

No going back

Microflats could be the answer to London's affordable housing crisis. Measuring 32 sq metres (around 345 sq ft) they are two-thirds the size of an average one-bedroom flat in the capital, and can be assembled in a factory, just like a car.
Still in prototype form, architects Piercy Conner hope they will be on sale for less than ?100,000 by the end of the year. Council-owned car park sites and the tops of new supermarkets have been earmarked as the ideal locations for microflat communities. But until local authorities revise their development standards to allow higher-density housing schemes, microflats will stay on the drawing board.

"Councils are concerned that they'll be opening the doors for unscrupulous developers to build terribly small, low-quality homes," says architect Stuart Piercy. "Paris doesn't worry about high density, and in Japan people are happy to live in small spaces near their places of work, rather than commuting long distances."

The architects took their inspiration from yacht design to make use of every available inch of space. While the shower room and bedroom are very compact, the living area is around the same size as an average lounge.

In a bid to get microflats off the ground, Piercy Conner formed the Microflat Company, and launched a nationwide competition to find two people willing to test out the concept of microliving in full glare of the public. Following a two-week, live installation in a Selfridges' shop window, and a TV documentary, there is now a 2,000-strong waiting list of key workers eager to own a microflat in central London.

Alison Benjamin