Opinion: Law firm TLT outlines the challenges facing Sadiq Khan if he wants to keep his housing promises

Katherine Evans
Labour Mayoral Hopeful Reveals His Vision For London
Sadiq Khan outlines his vision for London, including an ambitious plan for housing (Source: Getty)

Targets have a way of tripping politicians up and Sadiq Khan may regret some of the ones he proposed in the run up to the election to help ease the housing problem in London.

His campaign pledge to set a goal of 50 per cent affordable homes in any new development now seems better politics than policy. The figure being talked about these days is a more modest, albeit less negotiable, 35 per cent. Even that will be tough to achieve. Despite considerable political attention in recent years, most schemes in London have struggled to get anywhere near that percentage.

Mr Khan certainly deserves credit for keeping housing high in the minds of anyone who wants to build in the capital, calling in big regeneration schemes and even promising to toughen the definition of ‘affordable’ in planning guidance due this autumn.

But rhetoric only goes so far. The reality is that he faces tough headwinds if he wants to achieve his amended target, not least because the relationship between local government, developers and housing associations is highly complex and getting more so.

Setting an affordability requirement in London will run counter to National Planning Policy Guidance from central government. The national guidance, which has legal primacy, plainly does not want building proposals unstuck over the issue of affordability and gives greater sway for developers to plead viability concerns.

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The fundamental philosophies underpinning policies and legislation from central government and the Mayor are so different, we could be in for some fireworks, especially with the government’s emphasis on home ownership and the Mayor’s on rentals. How the two find a compromise will be crucial.

Meanwhile, Mr Khan’s most likely allies, Housing Associations, have problems of their own. The extension of right-to-buy and a requirement to cut rents by one per cent every year between now and 2020 are undermining their ability to raise funds for new building projects. The ones that work now often need a very strong, fully commercial component to be viable.

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Their problem is, in turn, a headache for developers. They traditionally rely on associations to buy off the affordable element of their schemes, something now far less certain. In this game of consequences, such uncertainty will make it far more likely that developers push back on affordability requirements they find uncomfortable.

The Mayor also promised rent caps, but Mr Khan will have to tread carefully if he doesn’t want to put off new developments. There may be better tools. For example, there are already effective limits for some elements of social housing through agreed caps on service charges in mixed developments.

Another pillar of his policies was the promise to develop public land, such as around hospitals. However, whether the owners of that land, who may have already earmarked sales to commercial developers to fund their core activities, will be quite so keen remains unclear.

Mr Khan has made a decent start in his first 100 days and clearly understands the housing problem. But he will have to defy economic and political gravity to deliver his most ambitious target: 50,000 new homes a year.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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