Deputy Mayor Lays Out Housing Strategy As Criticism Of Sadiq Khan Starts To Rumble

The backlash has started.

A year after Sadiq Khan took office as mayor of London, criticism from the development community of his housing policy is starting to mount. 

But the man in charge of housing at the Greater London Authority, deputy mayor James Murray, said the new housing policy gives developers clarity and a way to circumnavigate the confusion and delay that have hindered London housing development in recent years. 

Articles have appeared in recent weeks citing unnamed developers who have criticised Khan for being distant and for being inflexible in his demand that developers provide 35% affordable housing to receive planning permission.

This inflexibility will stop new developments being built at all and so result in fewer rather than more affordable homes being built, the argument goes.

Murray told attendees at Bisnow’s London State of the Market event that clarifying the rules speeds up the construction of new homes by offering certainty and reducing confusion. He said City Hall will be adopting a more “muscular and interventionist” strategy in the land market to free up sites for new development.

“One of the really important objectives we had coming in to office was to move beyond the delay and confusion around viability assessments that had come to dominate all conversations about planning and housing in London,” he said at the event.

Viability assessments are a process where developers are able to argue that the amount of affordable housing in a new scheme has to be reduced because otherwise the scheme would not be financially viable. The development community has been accused of gaming the system, overpaying for land because they are able to reduce the amount of affordable housing later in the planning process.

In new guidance on planning brought in by Khan and his team, developers are guaranteed planning permission if they offer 35% affordable housing and all other relevant criteria are met. Khan has blocked some high-profile schemes that did not meet this threshold, such as the redevelopment of New Scotland Yard.

“From the point of view of the developer, local council and public watching from the sidelines, the primacy that viability assessments had taken at every stage of a development, the fact that they were not well understood, the fact that they had become a bit of a game really, was not giving anyone certainty and confidence,” Murray said.

“Viability has to stay at some level because it is in the national planning framework, but we can offer a fast track way through, where everyone agrees on a level of affordability, you can get planning permission and get on and build. That’s been broadly well-received by the industry.”

He said the question he gets most often is not about the legitimacy of the 35% threshold but about what it entails. 

"[Developers ask me,] 'How much is social, how much is shared ownership, that makes the difference for me? Can you give us as clear a steer as possible about what’s in it?'”

Public bodies such as the GLA are often accused of not having the processes in place to bring forward land they own that could be used for new housing.

Murray said this would be a big focus of Khan’s administration. New teams are being put in place to not only bring forward GLA-owned land, but to intervene where private sector land is being held back and hindering large developments.

“I think you will see a new interventionist and more muscular City Hall unlock some of the opportunities we have across London working with local boroughs to help them bring forward land,” Murray said.

The need for a different strategy on affordable housing was shown by the fact that 80% of the new housing being built in London today is affordable to only 8% of Londoners, Murray said.

“The response of the industry so far isn’t meeting the demand that is there in the capital,” he said. “If we are going to increase the number of homes we’re building we need to be building different sorts of home to meet the needs of different parts of the market. That means building more affordable homes, it means building more in outer London in areas where the market values are more attainable, and build-to-rent needs to play an important part in that affordable mix.”

Mary-Anne Bowring, managing director of build-to-rent consultancy Ringley, pushed Murray on why targets are so low for build-to-rent units as part of City Hall’s overall strategy to increase housing delivery.

He said there was no set target for different types of new housing within the overall target of 66,000 new homes a year, and that given build-to-rent is such a new sector for London, there was still a lot of detail to figure out on how it would fit into the strategy for affordable housing.

“We got the impression that people in London wanted to support build-to-rent but there is still quite a lot of detail to settle,” he said. “That’s why in supplementary planning guidance we said to both the development industry and councils, 'here is [the] way we think viability should be assessed, how affordable should be accommodated.' Hopefully both of those steers will help projects go quicker through the system.”

In terms if what constitutes affordable rental property, Murray pointed to the London Living Rent metric created by City Hall, saying it was around a third of the average London income, and about two-thirds of the average rental level for properties across London.