Can Labour Offer a Real Solution to London’s Housing Crisis?

An analysis of Sadiq Khan’s proposed policy on Housing and Planning

On 5 May 2016 all eligible Londoners will be able to cast their vote for the London Mayor. One of the most challenging tasks that our new Mayor will face is that of housing in the capital. The housing situation in London has reached crisis point and as a result our choice in 2016 could be more important than ever. The perfect storm of escalating rents, investment properties, rising homelessness and demand far outstripping the supply of rapidly reducing social housing stock, has only just begun.

Sadiq Khan, Labour’s mayoral candidate has recently launched a policy consultation on 6 key areas, one of which is Housing and Planning. Mr Khan agrees with this writer that housing is the greatest challenge that will face London’s next mayor and makes the interesting point that this will inevitably have a knock on effect on the business sector who will lose valuable talent if potential employees cannot afford to live in London. He sets out the following 6 key points:

1. Homes for Londoners: to free up land for immediate building of genuinely affordable housing, to assist councils in building and developing homes teams and to fight for 1.4 billion of funding.
2. Affordability: to establish an affordability test and to aim to deliver 50% affordable housing in new developments.
3. London Living Rent: to establish a rent for the capital based on a third of local average income, rather than market values.
4. A better private rented sector: to establish a London-wide not-for-profit letting agency, to name and shame bad landlords and promote those who show best practice.
5. London Home Bonds’ and pension fund investment: to raise new London Home Bonds and other strategies to increase investment in affordable housing.
6. Putting Londoners first in the queue for new homes: to offer new homes first to those who want to live and work in London, to stop ‘buy-to-leave’ and prioritising local tenants and first-time buyers.

At first glance this proposal seems to offer a potential solution to many of the current problems – setting out plans for tackling unaffordability, bad housing and lack of accommodation. There are some obvious questions to be asked about the workability and funding of these plans, which, it is hoped will be properly explained in the final policy:

• How will the London living rent work in practice? Will all private landlords be forced to comply or just those with a certain size portfolio? How will this be regulated?
• Care needs to be taken in assessing the LLR. In London there are many areas where the very richest live alongside the very poorest and therefore any exceptionally high incomes may well skew the figures. It needs to at least be the median average to have any meaning.
• £1.4 billion to help fund council’s building seems unlikely to be enough. The London Borough of Haringey for example has to reduce their spending by £70 million by 2018. Can the proposed investment by the Mayor really offset these draconian cuts?
• We at Hodge Jones and Allen deal with many clients living in shocking disrepair but will naming and shaming the responsible landlords really address the problem? Many are so desperate for housing that they will take anything. Perhaps some financial penalty or threat of being banned from renting would be more of a deterrent?

There are other areas which have not yet been touched on at all. Some of our biggest concerns are around the government’s new right to buy policy for Housing Associations, proposed ‘pay to stay’ policy and the end to lifetime tenancies (all of which have been written about in these pages). What does Mr Khan propose to do to combat the inevitable fallout from these?
Some suggestions would be as follows:

• To lobby for powers to exempt London based Housing Associations from the devastating right to buy scheme.
• To avoid or adapt the charging of market rents for households whose combined income is over £40,000 as such income is unlikely to pay for very much in the capital at all.
• To lobby for powers to ensure that Councils fulfil their obligations to replace all sold off housing, a promise which has sadly been broken time and time again.
• To address the issue of selling off huge swathes of social housing by many Councils. This is decimating communities all over London – can Mr Khan put in place a policy to ensure that no housing can be sold off unless the occupants are guaranteed re-housing in a one mile radius?
• To address the existing problem of empty investment properties not just to prevent new purchases. Perhaps a London based tax on non-occupied properties?
• The conditions in social housing are also a recurring problem. Mr Khan needs to name and shame Councils and Housing Associations who repeatedly fail to fulfil their repairing obligations and perhaps impose financial penalties on them also.
• There must be a proper focus on building new quality housing to ensure longevity and a limited need for repairs later on down the line.

It is difficult to see how any of this can be achieved while the Government continue to cut public funding at the current terrifying rate but if Mr Khan can find the money, this is what is needed.
Overall however, it is felt by this writer that Sadiq Khan has made a good start identifying the real issues and how to start clearing a path through the maelstrom. Responses to the consultation are due by 6pm on 27 November 2015.