27th June 2016
London’s new mayor Sadiq Khan made a plethora of comments about increasing housing delivery before his election. He now needs to put this into practice. Paula Carney, director of our London West End office, reports on the latest news and looks at the impact for developers.
The Mayor wants to drastically increase the supply of housing in London and make renting more affordable and secure. He has pledged a target of 50 per cent of all new housing to be affordable on both public and private land. James Murray is the new Deputy Mayor for Housing who is covering the wider planning brief until a Deputy Mayor for Planning is appointed. Reassuringly for developers, he emphasised recently that the delivery of this strategy is a ‘marathon not a sprint’. The new mayoral team also recognises the need for a transition period –they do not want to disrupt housing delivery if it is ‘in the system’.
Details of his stated commitments include:
A ‘London Deal’ - a key element being ‘Build to Rent’ for the private rental sector (PRS). The team sees this as vital to not only achieving delivery but, crucially, absorbing housing into the London market. There may also be separate regulations for the design of private rented properties involving potentially smaller units with less amenity space. The team recognises that this sub-sector has different economics and a potentially different implication for viability. A committee or team on this topic is currently being formed of key industry participants.
Replacing or heavily amending the financial viability process, viewed as divisive by the Mayor –this is likely to be reformed in stages. Some initial guidance is likely to be released by the Greater London Authority (GLA) within the next month.
More active role for the GLA in using public land effectively and quickly by working with other public sector bodies such as Network Rail. This follows on from work by the London Land Commission to map publicly owned land in London. Mr Murray has said: “We need a programme where the GLA can work with the public sector authorities to bring forward land that is genuinely surplus to requirement and start building quickly”.
Introduction of the London Living Rent- a new type of home where rents are a third of local tenants’ average incomes.
Initiative to give renters priority to buy ahead of landlords and investors
First dips on new homes for Londoners rather than overseas investors.
Provision of live/work units as part of the Mayor’s affordable housing programme and support for housing associations.
Exercise ‘use it or lose it powers’ for developers who sit on land with planning permission.
Protection of the Green Belt.
Support for councils to bring vacant homes back into use.
The GLA to retain more of the tax revenues generated in London. Mr Murray has said: “When we talk about getting funding right for London that has to include getting the right funding settlement from Government and that it recognises the scale of the challenge we face in London. We need to make the case for London retaining more of its own resources to reinvest in housing”.
In addition, we understand that the Mayoral team is speaking to the Secretary of State, in lieu of some increased mayoral powers (undisclosed), about greater interaction with central Government to “get building”.
On the development control side, Stage 2 decisions for two housing schemes, in Harrow and Walthamstow, demonstrate that the Mayor is prepared to accept affordable housing at lower levels on private land (albeit at least on sites ‘already in the system’). On the other hand, he has also directed the refusal of a Green Belt scheme in Chislehurst in Bromley, demonstrating his commitment to the Green Belt.
Developers can take comfort from a general softening of the rhetoric on levels of affordable housing on private land, since Mr Khan’s election. There appears to be more emphasis on the robustness of viability assessments and a focus on transparency. There also seems to be some good recognition of the PRS model and its differences to the private sale market.
However, what the Mayor can do about the increasing shortage of construction workers putting pressure on the costs of development and thus affordability we are not sure – and the referendum result can, surely, only make that worse. In the long-term, the London Plan will be amended and this will bring more clarity.
In the meantime, we will keep an eye on events as they unfurl and keep you posted.
To find out more, you can contact Paula, Director, on 0207 631 9050 or email@example.com.