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03/06/2016

Khan's new Deputy Mayor for Housing: good intentions, but will he do more harm than good?

 

After weeks of speculation, James Murray has been appointed the
London’s new Deputy Mayor for Housing. Murray is being brought in from
Islington Council where he served as its Executive Member for Planning. Working
closely on Sadiq Khan’s housing
manifesto
, he is regarded as one of the most imaginative and, in the eyes
of some property developers, most obdurate borough housing leaders in town. He
faces the hefty task of simultaneously increasing overall housebuilding and the
percentage of ‘genuinely affordable’ homes delivered within that total - a
mission critics regard as a circle that cannot be squared.

So what can we expect from Khan's new tsar? Well he’s made quite a
name for himself since being appointed as Islington’s housing lead in 2010,
religiously pursuing a 50% affordable housing target, publishing viability
assessments, imposing fines for developers for vacant homes, throwing cash for
social housing and handing penalties to ‘buy-to-leave’ investors. His
over-prescriptive approach, however, is raising a few eyebrows, with some in
the industry already briefing that his policies could stifle supply by getting
developers to sit on their hands. The initial consensus amongst property types
is that he’s someone who will take a tough line with developers who want to, in
his mind, manipulate the planning system to cut down on affordable homes. With
a history of blocking developments and launching High Court challenges against Government,
many are fretting that giving him a seat in City Hall could stymie development
in the capital. Friends of Murray, however, say he has a fair wind behind him:
a strong moral, political and economic case for shaking up the approach to
housing.

You only need to look at Islington’s political landscape to see that Murray’s
uncompromising style is in tune with his voters. Home to both Labour leader
Jeremy Corbyn and, at the table of Granita
restaurant on Upper Street
, Blairism itself, the borough has been
christened the Guardianista colony and the birthplace of champagne socialism.
Today, its town hall is home to 47 Labour members, plus one from the Green
Party, and the people here haven't returned a Conservative councillor since
1994, or an MP since 1931. But beyond its trendy boutiques, alternative
theatres and radical book shops masks a sobering reality: the borough is the
sixth most deprived in the UK; it’s as fashionable as it is pricey as it is
poor. Almost half of all homes are for social rent, one-third of children live
in poverty, 18,000 are on the Council’s housing waiting list and where the
borough meets the City, buying a two bedroom flat can set you back the best
part of two million pounds. So it should come as no surprise that in the
context of a Tory Government, in their eyes, hell-bent on selling off council
homes at the expense of ordinary folk, Murray’s preference for genuinely
affordable homes is well received here, and in many parts of London too.

Murray’s New Statesman
article earlier
this year gives us an insight into how he may do business in City Hall. Casting
property developers as pantomime villains, he says London needs to ‘reset the terms for dealing with
developers’
and even went so far as to declare that he is prepared
to ‘stare [his] opponents
down’
if they do not comply with his affordable housing policies.
Although the anti-developer rhetoric and land banking conspiracy theories are
certainly popular with his voters, the irony is that his policies may actually
be aggravating the capital’s supply-side housing crisis. Islington, according
to developers, is now considered one of the most difficult boroughs in London
to bring forward schemes. In the year to March, for instance, half of planning
applications for residential developments of 10 or more units were rejected -
the fifth-highest rejection rate of a London borough. This standstill,
according to property investors Exemplar, is due to Murray pioneering  an
approach that ‘if you don’t build 50% affordable housing, then you’re not
building at all.’ As the saying goes, 50% of something is better than 100% of
nothing.

Murray’s legacy at Islington, characterised by a strong drive for affordable
housing, chimes with the dominant theme of Sadiq Khan’s mayoral candidacy. For
the new Mayor, Khan, like his new deputy, is keen to implement a 50% ‘genuinely
affordable’ target on all new housing developments - a key manifesto pledge. It
was an exceptionally popular policy with the ever swelling ranks of London’s
private renters - even amongst Conservatives. However, you only need to go back
10 years to see that both Boris Johnson and Ken Livingstone, Khan's
predecessors as mayor, set affordable housing targets only to lower or miss
them later. And it looks like history is repeating itself too: there are now
reports that the new target will not apply to all sites, but that the mayor
will take a ‘pragmatic
case-by-case’
approach to affordable housing. Murray himself is now
calling the blanket requirement as a ‘strategic
long-term target.’

As the realities of City Hall settle in and targets are rolled
back on, what is clear, however, is that both Khan and Murray are dealing with
a pretty pitiful record of affordable housing delivery. According to Khan, a
mere 13% of approvals were for affordable housing in London last year, woefully
short of what London needs. So, the question now on everyone’s lips is: will
Khan's rigidity be imported into City Hall, or will he be pragmatic enough to
open doors with those in the industry, put aside the rhetoric and work to
tackle the housing crisis?

If
you would like to discuss anything in relation to Sadiq Khan's new
administration and the impact on your business, please email the London
Team or call 020 3697 7637.

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