Khan’s broken promises to London on house building
City Hall rules are throttling proposed schemes and adding to the crisis in the capital, developers tell Matt Oliver
Park Royal, a sprawling west London business park, is about to boast some of the best public transport links in all of Greater London.
Bounded by six underground stations, it is also a short stroll from both the new Elizabeth Line and Old Oak Common, where High Speed 2 services from Birmingham will soon glide in to terminate (at least initially).
In a city with a chronic housing shortage, you might reasonably expect this kind of prime real estate to be a good place for developers to build flats for legions of commuters.
Instead, plans drawn up under Labour’s Sadiq Khan, the Mayor of London, will see the vast majority of the business park remain reserved for industrial uses – including the production of biscuits by McVitie’s. The decision means the area will remain carpeted with single-storey sheds, rather than a more efficient mix of residential and commercial buildings.
“Nobody can really believe that Britain needs its biscuit production to take place in this incredibly valuable and well-connected site,” says Robert Colvile, director of the Conservativeleaning Centre for Policy Studies.
“The reason it does is that the Mayor bans housing there.”
The situation at Park Royal is just one example of how many of Khan’s policies fly in the face of his stated goal to tackle the housing crisis, critics say.
Since taking office in 2016, Khan has singled out the housing shortage as one of the capital’s biggest challenges, describing it as a “grave social injustice” that is pricing out ordinary Londoners.
He is right. The average home in London cost £535,597 in August, according to official figures, compared with £309,616 nationally. Likewise, Rightmove says the typical asking rent was £2,567 per month in the second quarter – twice the national average.
It is not only because of higher local wages. Separate research by Schroders this year found that a typical home in London costs 12 times the average annual wage in the city, compared with between five times and eight times local income across the rest of the country.
When Khan took office, he vowed to tackle these sky-high property costs by ramping up the amount of affordable housing delivered.
Yet since then average house prices have spiralled further and Khan has failed to hit his own house building targets in every year bar one. On average, since taking office, Khan has delivered about 36,000 homes a year – well below his goal of 52,000.
Even this underplays the true scale of failure, as most experts believe you would need to build double the current target to even begin to make a dent in prices.
London’s Mayor has a variety of powers to encourage house building, but cannot decide where most developments go or whether to individually approve them – a responsibility that falls to the capital’s 32 boroughs.
It means that any mayor has “one hand tied behind their back”, argues Anthony Breach, a senior analyst and housing expert at the Centre for Cities.
There are other problems too. There is a broader issue with England’s site-by-site approach to planning approvals, which makes the development process more uncertain. The general market malaise brought on by rising interest rates has made builders more cautious, Breach adds. Finally, pending changes to building regulations in the wake of the Grenfell Tower fire are also sowing confusion.
Yet one very significant lever Khan does have at his disposal is the London Plan: a strategic blueprint that sets housing targets for each area and provides guidance to developers.
Under Khan, the plan has ballooned to more than 500 pages and imposed a plethora of policies on how builders should design their schemes.
The rules range from high-level “strategic industrial” designations for sites such as Park Royal to low-level meddling in the positioning of windows and floor-to-ceiling heights.
“Too often, we see this kind of micromanagement – and it comes with costs,” says Breach. “The road to housing shortages is paved with good intentions.”
The result has been a series of constraints that whittle away the size of proposed developments, throttling the viability of many schemes before they can even get started. One major developer told The Sunday Telegraph that the cumulative effect of Khan’s policies was to reduce the number of homes in an individual project by “up to 30pc”. This developer said they had made no land purchases for more than a year because of the poor conditions.
In many cases, the requirement for 50pc “affordable” housing is simply too high for many schemes to remain viable, according to one industry figure.
“It is like the Laffer Curve with taxes,” they say. “Eventually you reach a point of diminishing returns and it just makes things unviable.”
Unlike the Labour’s national leader, Sir Keir Starmer, Khan has also refused to carry out any review of the green belt and blasted a Labour-run council in Enfield for trying to release some of the land for housing.
These policies collectively act as a drag on housing delivery, with data from Molior showing that there were only 1,430 construction starts for new homes in London during the third quarter of this year – the lowest since 2009, when the country was gripped by a recession and banking crisis.
Among Khan’s critics is Berkeley Group, one of the capital’s most prolific developers, which claims the planning system in London has become unworkable and is driving out investment. “Without urgent, radical action these regulatory barriers are going to cause a further fall in delivery and London’s deeply damaging housing crisis will get worse,” a spokesman says.
Last month, Michael Gove, the Housing Secretary, took aim at Khan and warned that if his housing numbers didn’t improve, central government could seize the controls from City Hall.
The Mayor’s office rejects these criticisms, arguing that Khan has delivered the largest number of homes “since the 1930s”. A spokesman says: “Given the scale of the housing crisis in London, Sadiq is focusing on building more new social homes and the homes Londoners can actually afford, rather than the luxury penthouse apartments prioritised by the previous mayor [Boris Johnson].
“Sadiq has proven that you can deliver record-breaking numbers of high quality, sustainable social and affordable homes at the same time as pushing up overall housing completions.”
Regardless, by anyone’s measure – including Khan’s – London needs far more housing than it is currently getting. Until the Mayor can find a convincing way to move the dial, areas like Park Royal will continue to stick out like a sore thumb.
‘The road to housing shortages is paved with good intentions’