Features - Business

London’s building – Khan’s housing strategy published

London Mayor, Sadiq Khan, has unveiled the first draft of the Housing Strategy for London, including plans that will free up sites for affordable housing.

The strategy highlights a fund of £250M that will be used by City Hall to buy and prepare land for new and affordable housing. These funds will be used alongside the additional £3.15Bn set aside for affordable housing in the Autumn statement.

Land made available for housing will then be sold to housebuilders, with the monies then used to buy further land for new affordable homes in a virtuous circle that will see 90,000 new affordable homes on site by 2021.

The strategy includes plans to bring together private tenant and landlords, developing better rights and security for renters in a new ‘London model’ of renting.

Building the right number and the right mix of new homes, and addressing the consequences of the housing crisis, are essential parts of the Mayor’s vision for good growth. He wants every Londoner to have access to a good quality home that meets their needs and at a price they can afford.

The aim of the strategy is to diversify the housebuilding within the capital, allowing a wider variety of homebuilders to complement the work of traditional private sector developers. Alongside this, the mayor acknowledges the need for support within the industry by bringing more workers into the sector and tackling the construction skills crisis as well.

To assist in this, the mayor will provide leadership and coordination to improve the image of construction. The strategy commits to improving London’s construction skills training system, and support the industry through the risks posed by Brexit.

The strategy also urges the government to provide a comprehensive and urgent devolution of funding and powers to the mayor.

“From £250M to kick-start my plans to secure more land for new and affordable homes, to a new model and fairer deal for millions of private renters, I want to help all Londoners facing the housing crisis,” Khan said.

“I will use my powers and resources to their fullest extent, but government needs to play its part too by giving London the powers and resources we need to see an even greater step-change in the number of homes being built.”

Mr Khan had already revealed new measures to boost affordable housing builds within the capital last month, with the delivery of his Supplementary Planning Guidance (SPG) scheme. Mr Khan is promising developers safe passage through the planning process, providing their developments meet a minimum requirement of affordable housing provision – 35% on private land and 50% on public. Those developments that make the grade will be fast-tracked through London’s planning quagmire.

There’s a caveat however. All developments must be underway within two years of initial planning approval. Any developer that fails to do so risks intense scrutiny from City Hall, with particular focus on the financial modelling that underpins their proposals.

The push by Mr Khan to tackle London’s housing crisis, follows hot on the heels of his rejection of a changed planning application for New Scotland Yard. London’s Mayor said that the reduction of affordable units within the £1Bn scheme was unacceptable. Explaining his decision, he said: “A shortage of affordable homes is at the heart of the housing crisis in our city.

“The scheme put forward for this site is simply unacceptable: it fails to provide the maximum amount of affordable housing that could be delivered on this landmark site, and follows a previous application in which the affordable housing provision agreed by the previous Mayor was already appallingly low.”

Mr Khan is setting out his stall for London’s housing crisis, and is pushing his agenda for affordable living in the city, the New Scotland Yard rejection comes just weeks after the mayor criticised Wandsworth Council and Battersea Power Station developers for cutting the number of affordable homes within the development by 40% to just 386.

With no official powers to reject the change in application, Mr Khan wrote to the council and strongly objected to the cuts.

He stated: “I am more determined than ever to do all I can to ensure Londoners are not short-changed when it comes to developers doing their bit to help tackle London’s housing crisis.

“The government now needs to show it is committed to this too and devolve the powers to help me stop developers getting away with unacceptably low levels of affordable housing.”

The strategy has already been complimented by the FMB, who has said the mayor’s focus on small sites will benefit both SME builders and the housing shortage in the capital.

Barry Mortimer, Director of FMB London, said: “If we’re to build the number of new homes Londoners need, we must urgently make much better use of the many existing small sites that are dotted all over London. In doing so, we will the strengthen the capacity of SME house builders to build more new homes and perhaps even attract some new SME firms into the market. FMB research has consistently shown that a lack of available and viable land is the main factor stunting the ability of small builders to deliver more homes. Indeed, over half of SME house builders believe that the number of small site opportunities is, if anything, decreasing.”

Mortimer continued: “We therefore welcome strongly the Strategy’s proposal for a presumption in favour of appropriate residential development on small sites, which goes further than proposed changes to national policy as laid out in the Government’s Housing White Paper. The ‘Small Sites, Small Builders’ programme will also link up public land owners with small builders, which could make accessing public land easier for small firms. We also welcome moves which will mean that less of the Community Infrastructure Levy is payable upfront on small sites. This will really help with cash flow for smaller builders and make the economics of small scale development slightly easier.”

Mortimer concluded: “The London Housing Strategy therefore marks a step forward in empowering smaller house builders in London. In order to reach the 50,000 new homes London needs to build each year, this renewed emphasis on small sites is vital. However, all such progress could be undermined if the Mayor fails to protect small sites from onerous levels of developer contributions. National planning guidance states that planning obligations should not be sought from developments of ten units or fewer, but implementation of this policy in London is patchy at best. Unless the Mayor, and London Boroughs, recognise the need to minimise burdens on the very smallest developments, SME builders will continue to struggle to enter the market.”

However, Anthony Codling, equity analyst at Jefferies, said the plan is easier said than done.

“Clearly any additional government funds invested into housebuilding is helpful, although suggesting that this will lead to the start of building 90,000 affordable homes is easier said than done, because private sector housebuilders choose to build homes only if the returns are attractive,” Codling said.

“If the mayor’s funding makes the building of an additional 90,000 affordable homes viable they will be built, if not I suspect they won’t.”

The draft strategy will undergo three months of consultation before the strategy is implemented.


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