JLL Residential Responds to Sadiq Khan Becoming New Mayor of London

  

Adam Challis, Head of JLL Residential Research, comments:

"Sadiq Khan has committed to delivering more affordable housing and to giving Londoners 'first dibs' on those homes. He has said he will introduce a 50 per cent affordable housing target for new developments, and use mayoral planning powers to stop 'buy-to-leave'. He has also vowed to stop homes being sold off in advance to foreign investors. In reality, however, there is little evidence of 'buy to leave' actually happening, and restricting demand is a quick way to compromise the viability and deliverability of new developments. The industry is already signed up to the mayor’s 'London first' concordat for sales, which commits to give Londoners first option on new homes in the capital and which we wholeheartedly support."

"Ultimately domestic demand is not strong enough to drive off plan sales rates, so the issue here is that action to restrict overseas investors would simply destroy the viability of most schemes, and would reduce, not increase, the level of affordable housing delivery. We should remember that Ken Livingstone had this aim and never got close to implementing it.

"Under Sadiq’s plans, the £400 million 'left' in this administration’s affordable homes budget will be used to support housing associations in their plans to deliver more homes. London would benefit and the intent is commendable, but there again remains a question around the industry’s ability to deliver. Constructions costs alone are increasing by around 8 per cent each year (driven by labour and materials shortages), which makes higher supply scenarios challenging to say the least. Similarly the plan to bring forward more land owned by public bodies like TfL, and to use the Mayor's new homes team to develop that land, would be universally supported across the industry if it makes commercial sense."
"Sadiq has a number of other plans revolving around creating a living rent, setting up a not-for-profit lettings agency to promote longer-term stable tenancies for responsible tenants and good landlords, and introducing a landlord licensing scheme. All of these policies may be beneficial to the market, but cost, process and regulatory challenges would pose hurdles to overcome.

"There is no doubt that the next Mayor will be committed to alleviating the severe housing difficulties London faces. There is also no doubt that there are many promising ideas however it is not for shortage of ideas that London finds itself in this situation. Rather, it is the deliverability of those ideas which matters most in a market where competition for funds is aggressive, where processes can tie up opportunities and where local and international interests may be at odds. Any Mayor who can work with the grain of the market to create long term and lasting solutions will make genuine progress in addressing London’s housing provision problems. Sadiq has promised to be the most pro-business Mayor yet, if he holds to this the development community will play its part in addressing the supply challenge."

 

 

Will McKintosh
Joint Head of Residential, MENA
+971 4 426 6911
will.mckintosh@eu.jll.com

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