Sadiq Khan housing strategy displays pragmatic grip

by Dave Hill

In London’s revivalist cosmos, where Labour’s third consecutive general election defeat was “a victory for hope”, the capital’s local authorities will soon be cascaded with taxpayer cash to be lavished on programmes of council house building not seen since distant decades when Herbert Morrison said (or maybe didn’t say) he would “build the Tories out of London” and boroughs could afford to buy entire streets, level them and put Municipal Dreams in their place. St Jeremy’s social rented paradise is on its way. All we have to do is make believe.

Meanwhile, in the listing dome of City Hall, the mayor’s housing team has been doing deals with reality. Sadiq Khan, elected promising that “tackling the housing crisis” would be his “first priority” (manifesto, page 5), has just unveiled his draft housing strategy, over 200 pages of upbeat yet firmly grounded measures designed to raise the low level of sanity extracted from the vast madness of stratospheric land values, Heath Robinson construction finance and sweeping global market forces that Mayors are obliged to wrangle with.

It’s a solid, coherent, pragmatic piece of work – the best such mayoral document yet, according to one well-read source. Much of it is familiar and already in effect, such as Khan’s distribution to grateful housing associations of a wedge of the £3.15bn bestowed on him by government when Gavin Barwell was housing minister, and his planning guidance incentive for private developers to up the “affordable” component of their schemes to 35%. These are large elements of a long-term quest to increase the proportion of new dwellings Khan considers worthy of the word “affordable” to an overall 50%.

Definitions of “affordable” are, of course, slippery, relative and have become, at times, Orwellian. (There’s a whole other piece to be written on all that, and it’s a work in progress). Khan’s draft document gets detailed on the issue in part four (from page 94), recognising that unaffordability affects not only many Londoners on low incomes with housing problems but also many in the middle range. The need to increase the supply of housing that is “genuinely affordable” across that spread of Londoners, and for incomers too, is a measure of the size of the policy mountain and widely recognised as both a socially and economically good goal.

In this respect, the ideal of “mixed communities” is neither utopian nor a weasel pretext for the worst sorts of redevelopment scheme, but a moral and a practical necessity if London is to function more justly and efficiently: good quality housing that doesn’t swallow half your pay cheque is required across the city for hospitality workers, school teachers, ambulance drivers and all sorts of other workers from Richmond to Barking to the City and West End.

A graph (shown below), captures a downward trend of affordable percentages during the time of Boris Johnson. Acknowledge the wider context: a post crash collapse in the building industry, making it harder to get squeeze out the types of new homes that are most needed. Johnson, though, or more particularly his planning chief Sir Edward Lister, was ideologically inclined to let market forces flow. Khan, steely and centre-Left, is much more interventionist. And interventionism in the context of constrained mayoral funds and powers means building a consensus and lobbying well.

 

The Mayor’s deputy for housing, James Murray, has spent much time and energy drawing together the city’s main property players around a common interest in getting stuff built. The key has been setting out clearly the stance of City Hall, which can veto schemes it doesn’t like but also be a helpful gatekeeper. Developers and boroughs knowing where they stand can proceed with greater confidence and the price viable for precious land factored into finances more firmly, hopefully with the effect of bringing that price down. The idea, summarised in the words of the document, is “to embed minimum affordable housing requirements into land values”.

On what is “affordable”, Khan’s more demanding definition is reiterated. There are three types he is able and willing to support through his own investment programme, a choice constrained by the terms on which the government has funded it. One is a London tailoring of affordable rent homes, a creation of the coalition government for people eligible for social housing but whose rent levels are allowed to be set as high as 80% of local market rates. That’s too high for most parts of London, Khan says, so he wants affordable rents benchmarked against traditional social rent levels, keeping them lower.

Type two, London Living Rent pegs rents to one third of local average earnings, creating scope for tenants to save for a deposit then buy a portion of where they live. Type three, London Shared Ownership, is a now familiar form of low cost home ownership and the Mayor has asked for more transparency on service charges, which in some past cases have turned out to be alarmingly high. Other types of “affordable” might meet the mayoral standard, such as live-in workspaces. There are proposals for protecting existing social housing and improving the replacement rate of those lost through Right to Buy. He promises to support more community-led housing of various kinds.

So much of the housing supply equation comes down to land and the cost of it. Launching the strategy this week, Khan announced that City Hall is entering the land market, looking to identify, buy and prepare sites it can then sell to housing associations or councils. Why would they do that? Because City Hall has some of the capacity required and others either don’t or can’t be everywhere. “We’re not competing, we’re adding to,” Murray explained. Cit Hall can sell at a recyclable profit but still at a price low enough to allow high levels of affordable homes to be built.

Khan also spoke about a promoting a “London model” for private renters, developing a reform plan to which tenants and good landlords alike can subscribe and asking national government for legislative change to make it real. The stress would be on longer and more secure tenancies, balanced with proper rights for landlords to evict when they have valid grounds. The Mayor also “supports measures that would limit unaccpetably rent increases with negatively impacting on housing supply”, a passage which shows he knows the possible downside of “rent control”. (See the box on page 175).

The draft strategy also has sections on helping leaseholders, tackling rough sleeping and more – too much more to deal with here, but there will be other opportunities. It gets to comprehensive grips with this morass of an issue and addresses it with energetic practically. Through it, we start to see the substance of Khan’s mayoralty take shape. It bodes well.

Read the 2017 draft London housing strategy here. Photograph of housing in Crystal Palace by Max Curwen-Bingley. 

 

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