His predecessor couldn’t get enough of the real estate community and was a regular at MIPIM, but Sadiq Khan, just over two years into his four-year tenure as London mayor, has never been to the biggest meeting of the real estate community. And he won’t be going this year either.
His communications with the property industry, the sector will tell you, have been few and far between, with the face-to-face meetings handed over to deputy mayors Jules Pipe and James Murray and the Greater London Authority’s executive director of housing and land, David Lunts.
But this week, EG got the man himself to talk about the property industry and, whether the sector agrees or not, Khan believes that there is strong collaboration between the mayor’s office and the industry, and that his demands on developers to deliver affordable housing are working.
Housing targets
Those demands include a 35% affordable homes requirement on all new housing development – with the goal to increase this to 50% – and more recently plans to bring in rent controls.
“We’re not on track [to deliver on affordable housing targets], we’re beating it,” Khan tells EG enthusiastically.
“The target last year was to start building 12,500 genuinely affordable homes. I’ve made it hard for myself – 12,500 starts would have been a record. We’ve smashed that record. This year, the target I have set myself is 14,000 affordable starts, and we’re on track to meet that as well. We’ve got to be breaking records.”
According to London Assembly figures, there were 2,400 starts in the six months to September 2018, meaning that there is still some way to go to hit that magic 14,000 for the March 2019 target. Indeed, EG revealed last week that the number of consents for all new homes across London fell by 32% in 2016-18, a drop of 40,000.
Uncertain times
Khan admits that it’s not going to be easy, especially with those targets increasing to 17,000 next year and 116,000 in total by 2022.
“The problem is that the macroeconomic situation – uncertainty around Brexit – is leading some developers to pause when it comes to starting to build other sorts of homes,” he says.
“The reality is that all of those in the real estate industry want to make a profit, and there’s nothing wrong with that. We are saying to developers that the quid pro quo of you getting permission to build these homes you want to build and make profit on is that a significant number should be genuinely affordable homes.”
His solution to affordable delivery, he says, is collaboration. And he insists that he and his two deputy mayors, Pipe and Murray, are engaging with industry.
“The good news is, it’s not a battle against developers,” he says. “Most developers get it. What I’ve been impressed by is the willingness of developers to work with us.”
He points to the rising proportion of affordable homes being delivered as an example, rising, he says, from 13% in Boris Johnson’s last term to 38% today.
Working together
“That’s developers working collaboratively with us, not us threatening them,” says Khan. “I see more of that teamwork going on between developers, those in the real estate industry, councils and City Hall. Because it’s in all our interests to make sure we meet London’s housing need.”
He adds: “We need to make sure that we get more assistance from the government, in the form of grants and financial assistance, but also changing the law around land assembly to make it easier for us to build the homes we need.”
Alongside his demand on developers to deliver “genuinely affordable” homes, Khan this week upped his pressure on the real estate community to deliver affordable workspace, with the launch of the Creative Land Trust.
The Trust will seek to deliver 1,000 affordable workspaces for artists and creatives at rents of just £15-19 per sq ft.
Creative thinking
And he is certain that the development community will get behind him. “I don’t believe that someone who wants to build homes in London doesn’t realise the importance of having good communities, and the reality is that one of the reasons London is an attractive place is because of our creative sector,” says the mayor.
So, while Khan himself may not be engaging with the real estate sector, there is no denying that he is an engaging individual. He is confident and aggressive in his demeanour. And he needs to be, as he certainly has a lot to battle with during the final two years of his current tenure.
His affordable targets will be increasingly difficult to reach as the economic environment gets tougher. And with another no-show at MIPIM this year, whether his sidekicks will really be able to get an under-pressure real estate sector on side remains to be seen.
To send feedback, e-mail emma.rosser@egi.co.uk or tweet @EmmaARosser or @estatesgazette
