Mortgage calculator: is it better to rent or buy?

Deep in the kingdom of Middle-earth, the smoke curling from Bilbo Baggins’s chimney beckoned visitors into a sumptuous abode — a vast and homely underground space.

From bedrooms and pantries to whole rooms devoted entirely to clothes, there was lots of space because, as the author J. R. R. Tolkien put it: “It was a Hobbit hole, and that means comfort.” But while the inhabitants of Tolkien’s fantasy world appeared perfectly content with their lot, it does not amount to much in the eyes of Boris Johnson.

The Mayor of London began a campaign yesterday for more space in housing schemes, complaining that the capital’s residents were living in cramped conditions akin to the homes of Hobbits.

Announcing an ambitious housing strategy, where he pledged to build 50,000 homes within three years despite the economic downturn, Mr Johnson said it was a disgrace that the average floor area of a home in London was 77sq m (830sq ft). That compared with 206sq m in Australia, 109sq m in Germany and 88sq m in the Irish Republic, he said.

“What’s that all about? We’re not Hobbits. I am not about building homes for Hobbits,” Mr Johnson declared. “I don’t want to cast aspersions on particular homes but I do think in this country, where if you read the newspapers we are not getting any thinner . . . they [houses] need to be human-sized.”

Mr Johnson will use his forthcoming London Plan to prioritise the need for more space, encouraging developers to think bigger than the Parker Morris standard for social housing, which requires a semidetached or end-of-terrace house for four people to have a net floor area of 72 sq m.

A spokesman said that Mr Johnson, as chairman of the London Housing Board, had the power to direct funding to developers whose schemes matched his drive for larger homes.

At the centre of his strategy, Mr Johnson pledged to spend £5 billion of regional house funding to create 50,000 affordable homes, with an emphasis on assistance for middleincome families. He acknowledged that times were “incredibly difficult”, but added: “It doesn’t mean for a second that we should abandon our ambitions.”

He said that he would jump-start the market by offering funding to struggling developers, to be paid back once the market recovered.

His target for new homes included 30,000 social housing units by 2011, despite dropping the requirement of his predecessor, Ken Livingstone, that all new schemes include 50 per cent affordable housing. Mr Johnson will spend £130 million on expanding subsidised-rent and rent-to-buy schemes, and £60 million will be spent on developing empty and derelict properties.

Nicky Gavron, a Labour member of the London Assembly, said that Mr Johnson would be unable to provide enough social housing, as he was giving boroughs less incentive to offer it.

With about 750,000 people waiting for social housing in the capital, the homeless advocacy group Shelter also expressed concern that Mr Johnson’s strategy had such a strong focus on low-cost home ownership. Adam Sampson, the chief executive, said: “To tackle London’s housing problem, the priority lies in delivering social homes for those at the very sharp end of the housing crisis.”

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