The housing challenge facing London’s new Mayor

The election of Sadiq Khan as London’s new Mayor comes at a time when the Capital’s housing crisis is at its worst since the immediate aftermath of the Second World War.  No doubt, he has many other issues in his in-tray, but trying to find ways of ensuring the implementation of some pretty ambitious manifesto promises on housing must be high on his list of priorities.  With so many of our clients homeless or living on a knife-edge in the private rented sector, Z2K’s hope is that the next four years sees a real increase in the number of secure and genuinely affordable homes.

In common with the other mayoral candidates, Sadiq Khan made a commitment to increase the number of new homes built in London to 50,000 a year.  Boris Johnson’s most recent Housing Strategy only set a target of 42,000 a year, and the actual number of new homes being built has fallen well short of that number in every year, so getting the numbers up to the new target will be a huge challenge.  That will be even more difficult given the growing grass-roots opposition to the high-rise, high-density schemes currently favoured by London’s big developers.

Mayor Khan’s most ambitious manifesto pledge was that 50 per cent of all the new homes built will be “genuinely affordable”.  This follows the formula of former Mayor, Ken Livingstone’s original 2004 London Plan.  While the target was never reached during Mr Livingstone’s time in office, the big increase in Social Housing Grant secured from the 2007 Comprehensive Spending Review did help ensure it was reached in 2011/12.  The difficulty now is that the level of Government funding has been cut to the bone in the past few years, and so most affordable housing has to be secured from within private-led schemes.

One advantage Mayor Khan holds is that there are plenty of “affordable” homes on the stocks.  Just as Boris claimed those given planning permission during Ken’s term, so he will claim those approved under Boris.  That will boost his figures in the short-term.  However, he is also committed to making social housing “genuinely affordable”, thus moving away from the Government’s “affordable rent” homes of up to 80 per cent of market rents.  The only realistic way to achieve this is by boosting the level of public subsidy in each home or offering housing associations the land at reduced cost.  He may even come under pressure to put extra public subsidy in to those already being built.

This all highlights the need for extra money.  We can expect Mayor Khan to bang the drum for extra government investment much more loudly than his predecessor, but he is unlikely to be successful in the short-term, and so he will also have to sweat every part of the Greater London Authority’s budget to come up with some extra funding.  He may also take a closer look at the kind of “Bond scheme” proposed by his rival, David Lammy, during Labour’s selection battle.  Given how often we have been reminded the new Mayor grew up himself on a council estate, it will also be interesting to see whether there is a shift in funding from housing associations to local authorities.

Given that so many of our clients are from Westminster, Z2K is also keen to see what action Mayor Khan takes against boroughs that are not maximising the delivery of social housing through planning obligation on new developments, and in particular, how he will reform the utterly discredited “Financial Viability Assessment” process for determining how much affordable housing each site should include.  Across London, we have seen evidence of that process being exploited.  But as the recent decision on the redevelopment of Whiteley’s department store showed, at Westminster it has the feel of a conscious policy decision of the City Council’s Leader and Cabinet, rather than a lack of nous by planners or councillors.

In the private rented sector, the Mayor’s powers are very limited.  He has promised to make the case for more powers to regulate private landlords and cap rent increases, but it seems clear he will get short shrift from ministers on those requests.  He has said he will press for an expansion of landlord licensing and also establish a London-wide not-for-profit lettings agency in an attempt to help raise standards in that sector, though the jury is perhaps still out on the usefulness of both policies.  Perhaps more interestingly, he has promised a London Living Rent – a new product designed to ensure Londoners don’t pay more than one-third of the local average income.

One issue we didn’t hear much about on the campaign trail was overcrowding.  It is now six years since the Mayor of London published his action plan to tackle overcrowding in social housing.  Its central target was that there should be “No more than 5,500 severely overcrowded households in social housing in London by 31 December 2016.”  There is no official estimate of the numbers of children who would benefit, but a target of 5,500 households probably represents fewer than 10 per cent of the 391,000 overcrowded children in London.  This really doesn’t go far enough, and so Z2K will be pressing Mr Khan to set a much more ambitious target for the next four years.

London’s housing crisis has been a generation or more in the making and no-one expects it to be solved overnight.  But our clients and hundreds of thousands of other low-income Londoners suffering at its sharp end, desperately need Mayor Khan to hit the ground running and take decisive action to deliver on his promises.  No doubt, we will have challenging words and criticisms in future.  But for today, we wish him well!

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