Comment: Khan’s London Housing Strategy

Sadiq Khan is rolling up his sleeves to tackle the housing crisis, writes Susan Emmett, head of housing and urban regeneration, at Policy Exchange The London Mayor plans to take a more interventionist approach to dealing with the shortage of homes that has led to the high cost of housing in the capital. His plan, unveiled in the draft London Housing Strategy this week, sees an active role for local government. It puts the Greater London Authority at the centre of accelerating new development, particularly for affordable housing. The strategy centres on City Hall plans to become something of a “land promoter”, spending  an initial £250m buying and preparing land for development before selling the sites on to house builders. This cash comes from deferred receipts on sites disposed by the GLA from 2012 to 2016, and is in addition to the £3.15b affordable housing budget from central government. It is also recyclable, with money made from sales used to buy further land, unlocking opportunities across the capital. To make this happen, the mayor will be recruiting new deal-making experts for his Homes for Londoners team. Their task: to knock heads together across the city, starting with land owners, local authorities and developers. If required, his new team will be prepared to use City Hall’s compulsory purchase to secure land for affordable homes. It’s ambitious and taking a more active part in brokering land agreements is a new step forward after years of undersupply. But can it work? The document stops short of spelling out whether the strategy relies on capturing the uplift in land value that results from planning play.  It would make sense, especially if the idea is to raise funding for investment in infrastructure. If this is the case, we might see City Hall seeking to buy tired industrial or employment sites at close as possible to existing use value before securing planning consent for higher density residential development from the boroughs. Given Khan’s pledge to ensure that “all parts of the city take their share of new homes”, we can expect such sites in suburbia where values are lower to be particularly targeted. Despite consensus for the need for more homes, City Hall’s deal makers will have to be tough negotiators. They can expect resistance from residents of outer boroughs who feel they have more in common with the home counties than London’s inner city. They should also prepare for higher expectations from landowners if their shopping spree results in an inflationary effect on the land market. To really make a difference to supply and affordability, all of this needs to happen at scale. And the homes brought forward must be additional to those which the market would have delivered anyway. City Hall’s aim to broker land agreements is the most significant part of the vision. But if the GLA is to play a bigger part in the market, it needs to work with market reality.  Policy frameworks don’t alter the fact that developers will only operate where there is healthy demand and the sums stack up. Susan Emmett is head of housing and urban regeneration at Policy Exchange