Housing Top Of Agenda For New London Mayor

9 May 2016

Labour candidate Sadiq Khan has been announced as London’s new Mayor. In our latest blog, we take a look at his key housing manifesto pledges.

Former Labour MP for Tooting Sadiq Khan was announced Mayor of London on 6 May, taking over from Conservative Boris Johnson who held the post for eight years. Ahead in the polling since January, Khan was the favourite to win, and in the election took 57% of the votes.

A human rights lawyer before moving into politics, Khan served under the previous Labour government. London’s housing crisis was a core focus for the Mayoral election campaign, with a focus on housing security for Londoners, meeting soaring demand and affordability.

Here’s a look at Mayor Khan’s key housing manifesto pledges:

Building 80,000 new homes a year

According to the Greater London Authority, between 49,000 and 62,000 new homes need to be built every year in London to satisfy the city’s growing population, while Savills have put the number closer to 64,000.

Khan’s target is to build 80,000 new homes a year. While Johnson was mayor he targeted construction of 50,000 new homes. During his tenure an annual average of 23,840 homes were built, with 26,860 built in 2014/2015. Khan’s higher target will be a challenge, if not almost impossible to achieve. The causes of London’s housing crisis are commonly debated, but include a construction skills shortage, combined with rising land, labour and material costs, as well as planning policy obstacles.

Mayor Khan’s strategy includes freeing up public land for house-building and encouraging development on brownfield sites. Time will tell whether bold action will spark new supply but ongoing failure to reach these targets means that London will likely see a continued housing shortage and as such, further increasing house prices.

50% of all new housing built on public land to be affordable for average incomes

While Johnson was mayor, he pledged that 31% of the 50,000 homes he targeted to be built, would be defined as affordable. This was already an attempt at a more realistic target, scrapping the 50% aim of his predecessor Ken Livingstone which most London boroughs were failing to meet. Khan has returned to Livingstone’s target of 50% and among some commentators there is a fear this may in fact result in a fall in development activity, further constraining supply, unless this can be offset with the higher home-building target actually being met.

First access for Londoners

Khan wants to give Londoners access to new homes before foreign buyers and is pushing for an amendment of the Housing Bill that would allow councils to portion off a segment of new properties to be marketed exclusively to Londoners, and aimed at first-time buyers, before they are offered to buyers elsewhere. This amendment would also allow councils to limit the number of properties sold more than six months before completion. It remains to be seen whether these amendments will go through. If so, they may, however, again stunt supply as they make it difficult for developers to gain the pre-sales capital needed to fund development.


Khan’s policies will take time to implement and, as we have seen with previous London Mayors, his aspirations for new housing construction will be challenging to meet. For now, it is likely that supply will continue to constrain London’s housing market despite Khan’s bold targets, which will lead to prices continuing to be driven up.


 

Hamish Pound

Written by Hamish Pound

Hamish is Head of Investment at IP Global and specialises in both developed and developing real estate markets following positions in the UK, New York and Thailand. As a consultant and analyst in his previous roles he has consulted on a number of new development projects across Southeast Asia.

Related posts