How Sadiq Khan's Housing Policy Is Making London's Housing Crisis Worse
His measures, which are supposed to tackle the housing crisis, make it harder to resist gentrification.
London Mayor Sadiq Khan (Paul Davey / Alamy Stock Photo)
Very few politicians deliver the promises they make when campaigning to be elected. None have ever improved on them. With the charity Shelter announcing that 170,000 Londoners would be homeless this Christmas, London Mayor Sadiq Khan, in a letter conveniently leaked to the Guardian newspaper, responded that he was "considering" introducing rent controls in 2019. And last week we learned that rent controls are going to be a major promise of his bid for re-election in 2020.
On the face of it, rent controls sound like a good thing, stopping private landlords from increasing your rent year-on-year. Khan first considered rent controls on assuming office in May of 2016, but said he didn't have the legislative power to enforce them. He now plans to ask the government to give the Mayor's office such a power. "I have long been frustrated by my lack of powers to help private renters," he said. In any case, if Khan's proposal turns out anything like the rest of his housing policy, we shouldn't get our hopes up.
In his election manifesto Khan said London needs to build 50,000 new homes in the capital every year of his administration. He promised to maximise affordable housing in new developments; to build new social housing and other "genuinely affordable" homes; to enable estate demolition schemes only with resident support and without a resulting loss of social housing; and to "tackle" the scourge of homelessness. He also promised a lot more, but that's enough to be going on with.
So let’s look at how the man Time magazine last year included in its list of the "World’s 100 Most Influential People" has met these promises.
When it was published in draft form in December of 2016, the Good Practice Guide to Estate Regeneration was denounced, not only by various members of the London Assembly but by the resident groups invited to comment on its proposals. A compilation of the lies used to justify the demolition of London's council estates, its sloppily written policy allowed the Mayor to renege on his electoral promises.
To his assurance that a regeneration scheme would only go ahead if it didn't result in the loss of social housing, the Guide now allowed their placement with so-called "affordable" housing. The promise that tenants and leaseholders would have the Right to Return to the redevelopment was now made contingent upon their ability to afford the hugely increased rents and property prices. And the condition that demolition would only go ahead with resident support was undermined by qualifications, ambiguities and evasions.
What quickly became apparent was that this document had been written not as a guide to "good practice" in treating residents faced with the demolition of their homes, but to managing and overcoming the rising tide of opposition from the campaigns of resistance on the more than 200 London housing estates threatened by the estate regeneration programme.
Unfortunately for Sadiq Khan, at the Labour Party Conference in September of 2017 his old nemesis, Jeremy Corbyn, went and put his foot in it by announcing that councils would have to win a ballot of existing tenants and leaseholders before any redevelopment scheme can take place. This proposal was immediately rejected by London's Labour councils, but it left the London Mayor in a difficult position.
To get out of it, in July of 2018, as an addendum to the Good Practice Guide, Khan published guidance on Resident Ballots for Estate Regeneration. This specified that only a single ballot will be permitted, and that it must be held as early as possible in the regeneration process – specifically before even a private development partner is allocated. Under the current model of estate regeneration, however, the redevelopment of a demolished estate is entirely dependent upon the council's private partners. Their financial investment in the scheme will determine what gets built. Holding a ballot before those partners have been found, therefore, is nonsense. Neither the council nor their future partners can possibly be made to honour a proposal on which a viability assessment has not yet been produced. The residents, in effect, will be voting on nothing more than empty promises.
Once again, far from empowering residents, the purpose of this policy document is to manufacture resident consent to a demolition scheme. With the vote secured, residents will not be able to change their minds, and in the face of objection the council can point to the ballot and call the new development "resident-led".
Which brings us to what is being built in London, on both new developments and estate redevelopments. In June of 2018, as part of his Affordable Homes Programme, Khan announced that he had won a total of £4.8 billion from the government to start building at least 116,000 affordable homes by March of 2022. Unfortunately, this includes the Mayor's new category of London Affordable Rent, London Living Rent and London Shared Ownership, all of which are considerably more expensive than Social Rent, and generally not all that affordable.
It is Shared Ownership schemes that make up the majority of so-called "affordable housing". Shared Ownership means the buyer needs a 25 percent share in the new property, which in London is upwards of £450,000, far beyond the reach of most Londoners. However, this only gives them the tenancy rights of an assured tenant. They don’t become the owner of the property until they have purchased 100 percent of the shares. And although they may own just 25 percent of the property, tenants are liable for 100 percent of the service charges. And if they default on their rental payments, tenants lose not only their home but also their down-payment on the property.
For all these reasons, Shared Ownership, which is the cornerstone of Khan’s Affordable Homes Programme, is looking like the biggest scam in the privatisation of council housing since Margaret Thatcher’s Right to Buy scheme.
The result of these policies is plain to see. In the year 2016/17, a net housing supply of 45,505 residential units were completed in London, 4,500 short of the 50,000 Khan said were needed in his manifesto. Worse, a target completion rate of 17,000 net additional "affordable" homes per year was missed by miles, with only 7,347 affordable units completed – less than 16 percent of the total. Worse still, of these so-called affordable homes, a mere 2,318 units – 5 percent of the total new builds in London – were for Social Rent.
It is by this example that we should anticipate the London Mayor introducing rent controls this year. Khan's strategy sounds like an attempt to shift the blame for London’s housing crisis away from his own failed policies and onto the equally disastrous and nearly indistinguishable policies of the Conservative government. In cities where some form of market-indexed rent control has been introduced, such as Dublin, Berlin and New York, private landlords have already worked out how to circumvent its cap on their profits – by withholding maintenance, by additional service charges, by increasing the value of the property, or simply by selling it, further reducing the availability of rental housing.
The best and perhaps only way to reduce rents for the 2.4 million Londoners who rent their homes from private landlords is to increase the supply of homes for Social Rent, rather than demolishing and replacing them with the unaffordable housing the Mayor is currently funding with billions of pounds of public money. And in place of the current programme of estate demolition, we urgently need the investment and policy for the refurbishment of London's existing council estates – which is entirely lacking from the Mayor's Homes for Londoners programme.
John Healey, the Labour Shadow Secretary of State for Housing, likes to talk about what he calls "Labour in Power" as an indication of what a Labour government will do. The example of the more than 150 council estates currently being demolished or privatised by London’s Labour councils, and the policy written by London’s Labour Mayor to accommodate this programme of social cleansing through marketisation, is the clearest indicator we have of what that will be. The time to hold the Labour Party to account on its disastrous housing policies is not when and if it forms a government. It is now.
Simon Elmer is a co-founder of Architects for Social Housing.