London Mayor 2021: What’s really been happening with housing and planning under Sadiq Khan?

London Mayor 2021: What’s really been happening with housing and planning under Sadiq Khan?

In his 2016 manifesto Sadiq Khan wrote: “The housing crisis is the single biggest barrier to prosperity, growth and fairness facing Londoners today”. He vowed to address a familiar list of  problems: soaring purchase prices, shortages of social homes, poor conditions and high prices in a growing the private rented sector. Three forms of what Khan dubbed “genuinely affordable” housing were promised, along with a pledge to give “first dibs to Londoners on new homes” and a target of “half of all new homes that are built across London being genuinely affordable to rent or buy”.

These aims were declared against the backdrop of a populist Left politics that was securing significant purchase in the capital – notably so in academia, the liberal media and the London Labour Party – and expressed through emotive claims about “social cleansing” and the poor being “pushed out” by “gentrification”. The solution, in this worldview, was to oppose private sector development and most forms of “regeneration”, especially of council-owned housing estates.

Khan’s approach was a blend of crowd-pleasing and practicality. He made important good appointments: James Murray, recruited from Islington, became his deputy for housing; Jules Pipe, who as Mayor of Hackney enjoyed the respect of borough leaders, was made his deputy for planning. Khan had already taken advice from local authority figures not to use the term “social cleansing” – a crude and reductive slogan – and the 50 per cent “affordable” target was soon being lightly hedged as a “long-term strategic goal”. But, in a change of mind, he introduced residents’ ballots as a condition for funding estate demolition and rebuild schemes (almost all of this since held have produced votes in favour of regeneration).

As with policing and transport, the ability of London Mayors to effect change in housing provision is qualified by the policies and attitudes of national government. Their capacity to contribute to the supply of “affordable” homes is partially dependent on how much money for that purpose they can get out of Whitehall and on what terms. An initial grant of £3.15 billion from Theresa May’s administration, whose housing minister, Gavin Barwell, was a London MP and also minister for London, was encouraging. This would be allocated to housing associations. At least half the homes they built would be expected to be “genuinely affordable” in Khan’s terms.

By the autumn of 2017 other key policy themes were taking shape. As the vast task of drawing up a new London Plan – the capital’s overarching spatial development blueprint – got underway, Supplementary Planning Guidance (SPG) was introduced, setting out how Khan would shape the supply of new homes from private sector developers coming through the planning system at borough level. A “threshold” test was set, whereby schemes proposing less than 35 per cent “genuinely affordable” dwellings would become subject to City Hall intervention.

The third channel for “genuinely affordable” delivery in Khan’s policy suite was new housing on land owned by the GLA or its “functional bodies”, which in practice mostly meant Transport for London. TfL already had a programme for developing its substantial estate, tying up with commercial developers and housing associations. It included the huge Earls Court regeneration scheme, which Khan had made a point of criticising and would later fall apart.

Khan brought to TfL’s property development programme a requirement that 50 per cent of new homes built on TfL land as a whole – not necessarily on each individual site should be “genuinely affordable”. TfL said it aimed to build 10,000 new homes in all with a range of partners across a string of sites.

By these means Khan hoped the proportion of new homes built in London that were “genuinely affordable” would edge up towards one in every two

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The context for Khan’s approach was what had widely become known as London’s “housing crisis”. Much of this crisis was far from new. Housing quantity, quality and affordability were problematic even in the 1960s and 1970s, hailed by some as a golden age of mass council-house building. But there was still homelessness, high costs, bad landlords and fraught debates about redevelopment, including what is known as “slum clearance” to make way for new local authority dwellings. Matching housing supply to housing need in London has long been problematic, including when the city’s population was falling.

The 21st century crisis has been about affordability, insecurity and in some respects the pace and manner of change. In part, this has been a symptom and consequence of London’s phenomenal economic and related population growth, starting from the end of the 1980s. In part, it’s been an outcome of ongoing national government policy, which has weakened London’s ability to house many of its poorer residents properly. In the capital, 17.7 households per thousand are in some form of temporary accommodation according to government figures, compared with 1.8 per thousand in the rest of England (page three).

House prices soared largely because demand has rose and supply lagged. The evidence base for the Mayor’s housing strategy says that the number of people in London has risen by 28 per cent since 1997 but the number of homes by only 19 per cent (page 16). To state the obvious, it’s not the fault of London Mayors – or for that matter London councils – that a London house that cost £100,000 in 1990 can now fetch £1.5 million, unless you blame them for better public transport or nicer public parks, which help to make a res more des.

At the time of Khan’s selection as Labour’s candidate and his election as Mayor, blame for rising prices was frequently laid at the door of investors from overseas, routinely accused of buying up job lots of “luxury flats” off-plan which rose in value like metaphorical “gold bricks” while standing empty after they were built. Khan himself indulged in such rhetoric, including in his manifesto. He still does.

Yet a report he commissioned by London School of Economics experts showed that, if anything, money from overseas helped rather hindered, including by generating “affordable” homes and other community benefits there wouldn’t otherwise have been money for. “Prime central” development has produced some ostentatious buildings. Conservative aesthetes decry their look and scale. Left protestors denounce them as symbols of greed. But the outrage they have caused is out of all proportion to their significance to London’s housing market and stock. they are prominent parts of London’s residential landscape but not terribly significant.

The larger causes of London’s housing problems are familiar and more banal: shortages of land and the resulting mighty cost of it; insufficient public investment; a private rented sector that is too often substandard; a private development sector that lacks a commercial interest in increasing supply if there are greater returns from restricting it and selling fewer properties at higher prices.

There has been a huge shift in the balance between different types of housing tenure during this century. There is more outright home ownership than there was in the mid-1990s, especially at both the top and bottom of the income scales, but the number of households with mortgages has fallen sharply.

There have also been big shifts in the city’s renting profile. “The number of households in London’s private rented sector more than doubled between 1994/95 and 2018/19,” the evidence base says, noting a “significant growth in the number of households from across the income distribution” especially in the higher income brackets. Khan is an advocate of private sector (PRS) rent controls, but no Tory government is likely to give him the power to impose them. He has launched an online tool to help keep tabs on “rogue landlords”, but Mayors can’t do much about the PRS.

At the same time, the percentage of households living in social rented homes has fallen steadily for 40 years, from 35 per cent in 1981 to 23 per cent in 2019. The big reason for that is very simple – there is less social housing in London than there was.

The Chartered Institute of Housing’s recent report looked at social housing losses nationally since 2012 alone. Using government and GLA figures they say 20,608 social homes were lost to Right to Buy during that time, 8,341 to demolitions and another 19,960 were converted to the generally more expensive Affordable Rent when re-let after becoming vacant. During the same period, 15,717 new social rented home were completed. It all adds up to a net loss of just over 33,000.

There are over three and a half million dwellings in Greater London but estimated need has been for tens of thousands more every year. “Our capital needs more than 50,000 homes a year,” Khan manifesto said, and when his draft London plan came out, he set an overall target of 65,000 a year.

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How have things been going? The planning system is a form of regulation and the SPD was Khan’s tool of market intervention. Mayors have the power to block planning applications that don’t conform to their strategic goals or even to determine them themselves. The SPG was the Mayor’s red line. Its introduction marked a big change from Boris Johnson’s City Hall, where the finances of individual schemes would be individually assessed under the auspices of deputy for planning, the experienced and respected Edward Lister.

A gut believer in market forces, Lister’s inclination was to encourage maximum supply and let the “invisible hand” do its thing. “Eddie’s not very interested in affordable housing,” a City Hall housing officer once remarked. Khan, though, had made it his mission to bring statutory influence to bear on the housing pipeline. Some critics, including friendly ones, thought the 35 per cent threshold too high, believing it would slow supply and noting that 35 per cent of nothing is nothing.

The trade-off was that a fixed figure gave developers the help of certainty – they and everyone else knew what the Mayor required and made their financial calculations accordingly. Awareness of the Mayor’s power means applicants and boroughs are mindful of requirements and ability to impose them. Better, perhaps, to accept his demands than to have their maths picked apart by a City Hall viability assessor and have to go back to the drawing board. It was also hoped the SPD would help hold down the high price of land in the long term – a huge factor in London development finance.

The next stage of Khan’s affordable homes homes programme was dishing out the government’s £3.15 billion. Mayors and would-be Mayors often talk about the homes they have built or intend to, but the Greater London Authority is not itself a housing provider. Rather, they allocate the funds to others, primarily housing associations.

The government cash came with national policy conditions attached. Khan’s manifesto had railed against Affordable Rent, a tenure introduced in 2010 which combined a reduction in grant to housing associations – part of “austerity” – with allowing to set rents as high as 80 per cent of local market levels. But money for Affordable Rent homes was what Khan got.

He had promised a new housing product called London Living Rent, conceived with middle-income households in mind. Rent levels would be pegged at one third of average local wages local. However, the terms of the government funding meant it became a low cost home ownership scheme, designed to help tenants save for a deposit for converting the dwelling to a shared-ownership one. There was money for shared-ownership homes too.

As Khan’s funding guidance for that £3.15 billion says (on page 6), the expectation was that it would “support starts for at least 90,000 new affordable homes through to 2021” and the agreement was that “at least 58,500 of this total will be a combination of London Living Rent and shared ownership”. While running for election, Khan had made much of his council house upbringing, but most of the affordable homes he could help fund at this stage were for low cost home ownership properties, not social rented ones.

He did, though, have some scope for making the Affordable Rent homes as affordable as possible by asked that they be set at the low end of the scale allowed, rebranding those properties London Affordable Rent. Their rent levels roughly matched what new (as opposed to historic) social rent levels would have been had the then former Chancellor George Osborne not ordered four years of one per cent reductions – a ruse for artificially lowering the housing benefit bill that hit social housing provider finances.

By July 2017, funds had been allocated to housing associations for 50,000 of the 90,000 affordable homes and 12,526 were started in 2017/18. In spring 2018, the government gave Khan a further £1.67 billion. His first Affordable Homes Programme, covering 2016-2021, was adjusted along with its target, which rose to the starting – as distinct from the completing – of 116,000 homes “by 2022”. Some of this money was earmarked for new council housing. Also in 2018, there was a significant change in government policy, when Prime Minister May announced that the cap on local authorities borrowing to build would be lifted.

Affordable programme starts in 2018/19 numbered roughly 14,500 and in 2019/20 (during which time Tom Copley succeeded Murray as deputy for housing) they were around 17,000. Though opponents have said things should have moved faster, these have met the Mayor’s targets. TfL ‘s progress has been slower: only 1,300 of the 10,000 target had been started by the onset of the pandemic and progress has been more difficult since, not helped by local resistance building homes on Outer London station car parks.

In November 2020, Khan secured a further £4 billion from the government for a five-year affordable home programme. It is far less than Khan had asked for, but with more flexibility than the previous deals, enabling more priority for social rent – over half of the starts this money will go towards will be for that tenure-type. City Hall has said the effects of Covid and the need to address the cladding crisis have contributed to larger amounts now being allocated per home, which are in any case higher for social rented dwellings. Another 82,000 affordable homes are intended to be started by 2025.

Meanwhile, overall housing supply has come nowhere near the 65,000 target of the draft new London Plan, though the total number of completions across all tenures has been high since 2016 by recent historical standards – 36,13 in 2018/19, for example –  and the gap between the supply of homes and growth in population has stopped growing. None of this impressed Communities Secretary Robert Jenrick who, in March 2020 with the original date for the mayoral election looming, wrote an extraordinary letter to Khan, not only directing him to make changes to the Plan but rubbishing his record on housing as a whole.

Did he have a point? There are a wealth of ways of looking at it. A housing market expert told Planning Resource – whose analysis of Khan’s pre-Covid record is recommended reading – that the Mayor has been unlucky in that the effects of Brexit and changes to stamp duty have resulted in developers being less active than they might otherwise have been. But he 35 per cent “fast track” threshold seems to have been accommodated by many, preferring to avoid the Mayor stepping in, as he’s been far more willing to do than Johnson.

Murray has expressed confidence that the SPG is making the difference he intended. Planning Resource compiled figures showing that the proportion of affordable homes secured through planning agreements has been rising under Khan, with the GLA saying three-quarters of larger schemes now pass the 35 per cent test, although the GLA itself says, in the housing strategy evidence base (page 33), that the number of affordable homes “in absolute terms” fell in 2019.

The truth about Khan’s record is that the truth is pretty tricky to define. That is largely because the effects of his policies are still at any early stage. Measured in some ways, the early figures since 2016 were worse than under Johnson – including affordable housing starts – though many of them arise from decisions taken during Johnson’s time. And the London Development Datastore shows that more homes have secured permission under Khan and that affordable proportions have begun lifting again under Khan after tailing off under Johnson. But that was all before the pandemic. And who knows what its effects will turn out to be?

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