How can London's next mayor solve the capital's housing crisis?

This is a simple question but one to which the London Housing Commission outlined several answers. At the launch, supported by Savills, of Building a new deal for London on Monday (7 March), mayoral candidates from the three main parties heard these proposed solutions loud and clear.

An important message for me was that, with fiscal freedom, London could double its delivery of new homes to 50,000 a year by 2020. The report advocates collaboration between the Greater London Authority and the city’s 33 boroughs to win a devolution deal from the Government, to give the capital more power over planning, taxes, borrowing and spending.

While devolution is a longer-term goal of the report, of more immediate interest to the candidates to succeed Boris Johnson are some of the short-term measures the IPPR-led Commission proposes. My eye was caught in particular by the calls by Commission chair Lord Bob Kerslake to strike a deal with housing associations to double their annual housebuilding in the capital in exchange for more sites; to speed up the release of land identified as not in use by the London Land Commission; and for the new mayor to issue London-wide guidance on negotiating affordable housing with developers.

The Commission’s proposals for more power for London are important because the scale of the challenge in the capital is unprecedented. As Lord Kerslake reminded us, average house prices, according to the latest figures from the Land Registry, are now £525,000 – some 45 per cent higher than they were before the financial crisis. Rents are also up, he said, by around 16 per cent to £1,400 a month, or £16,800 a year.

The report suggests various ideas for the devolution ‘city deal’:

• Give the mayor power to ‘call in’ boroughs if they fail to identify enough land for homes, or refuse too many applications to build new homes
• Allow London to keep more of the stamp duty raised from homes in London, adjusting the rates over time
• Devolve responsibility for setting planning fees to allow boroughs to charge higher fees, enabling them to speed up the planning process
• Give local authorities the power to levy a discretionary tax on developers where agreed housebuilding targets have been missed

As I’ve said, however, a devolution deal could not happen overnight, so the Commission suggests other actions to be taken more immediately. These steps could be taken by the new mayor regardless of the progress of any devolution negotiations with the Treasury. It was encouraging to hear the three main mayoral candidates who attended the launch of the Commission’s findings on Monday expressing their broad support.

Conservative candidate Zac Goldsmith said: ‘I agree with your report’s key findings. We need to keep a greater share of our tax…it is critical that we have a mayor that can get a good deal from government.’ Labour’s Sadiq Khan, who believes that the mayoral election is ‘a referendum on housing’, described the report as ‘a fantastic contribution to a very critical and crucial debate’. Lib Dem Caroline Pidgeon added: ‘I strongly agree with report’s central conclusion that building more homes and more affordable homes is the only way to create step change in supply need to improve affordability in the capital for the long term.’

While we can expect the mayoral race to be high on rhetoric, the London Housing Commission has produced some tangible, meticulously thought-out proposals, with a clear outline of how to put its theory into practice. 

The success of whichever measures the winning candidate adopts will hinge on much closer working between national and local government and the mayor and London Assembly. There is an opportunity for real collaboration to work towards achieving a sustainable, long-term housing strategy for London.

The Commission’s report is packed full of good ideas – the question now is to what extent the mayoral candidates pick up the gauntlet that has been thrown down to them.

Robert Grundy is Head of Housing at Savills

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BDC 305 Jun 2023