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Khan's vision for housing in London comes to fruition

Thursday 24 May 2018

After a consultation late last year, which elicited more than 2,000 responses and which we responded to, London Mayor Sadiq Khan has now laid down his final plans aimed at tackling the capital's housing crisis.

His ambitious plans, set out in the 264 page document, include ensuring that private renters and leaseholders get a fairer deal, tackling homelessness, building more homes, and high quality homes in inclusive neighbourhoods.

Whilst the lion's share of Kahn's proposals revolve around getting the capital building more affordable homes, he acknowledges that building the homes Londoners need won’t happen overnight, which is why the strategy also sets out how the Mayor will help London’s growing numbers of private renters and leaseholders.

Below is a summary of main proposals which will effect the private rented sector:

A fairer deal for private renters and leaseholders

The private rented sector is now estimated to make up around 27% of households in London, and expected to grow to around 40% by 2040 (PwC Regional Tenure Projections, 2016).  

Khan's plan is to help Londoners to find affordable accommodation and tackle rising rents, lack of security and stability, and poor living conditions for those on low and middle incomes. The London Housing Strategy sets out three types of affordable housing:

  • London Affordable Rent for those on low incomes, with rent caps based on social rent levels;
  • London Shared Ownership / part buy part rent - first step on the housing ladder – based on the national shared ownership model, but with extra assurances for Londoners over service charges;
  • London Living Rent, for middle income earners struggling to save for a deposit.

    London Living Rent will be based on a third of local average household incomes. All intermediate rented homes should provide at least 20% discount on market rents for up to 10 years, enabling Londoners with a maximum income of £60,000 to save for a deposit. There will also be more opportunities for longer tenancies. Current rates are around £1000 for a two-bedroom home. Homes will be provided by councils and housing associations and be built over the next five years. 

Renters can search for homes currently available via the london.gov website.

The Greater London Authority (GLA) has already published maximum rents (inclusive of service charges) by number of bedrooms for new London Living Rent homes in every ward in London, and will update these figures on an annual basis.

With many households relying on securing homes in the growing private rental sector, which he says come with high rents and steep rent increases, he wants to see a new tenancy model introduced for renters - the 'London Model'.

What is the London Model?

Part of Khan's radical approach to the private rented sector involves creating a new tenancy model, which will be developed by working with landlord representative bodies and tenant groups. He calls the new model the 'London Model' and key factors are to:

  • Improve security of tenure - options include: longer tenancies, increasing notice periods for eviction when the tenant isn't at fault, and reforming 'no fault' eviction 
  • reduce discrimination - e.g. against welfare claimants
  • Improve and speed up eviction process and dispute resolution
  • Ensure landlords retain their right to gain possession of their property for legitimate reasons 
  • Work with buy-to-let mortgage providers so that landlords are given more flexibility when renting out property for longer term lets, or to welfare claimants

As well as working with Government to improve and implement the Tenant Fees Bill, the Mayor will also work with employers to widen access to Tenancy Deposit Loan Schemes to help renters afford upfront costs of renting. He also urges the Government to do more to help those on low incomes struggling to pay their rent.

Once the London Model is in place, the Mayor will also look at ways to stabilise rents or introduce rent controls, something which ARLA Propertymark strongly opposes.  

In addition to private renters, he also wants to see a fairer deal for leaseholders, something which NAEA Propertymark is passionate about too and has written about and campaigned for numerous times.

A fair leasehold system is something that is particularly important for London where most new homes being built are leasehold. He commits to improving the quality of advice and support available for leaseholders and also extend the London Charter for service charges so that it applies to leasehold properties.

Kahn, like Propertymark wants to see reform of the leasehold sector and fully supports the Governments strategy to address the widespread abuse of leasehold tenure and ground rents, which could include looking at introducing a new type of tenure. 

Of course, having affordable housing is just one part of the jigsaw puzzle and it is nothing without decent living standards, and renters need to have confidence that the place they call home and their money will be safe in their chosen home. 

Tackling the rogues

Khan wants to give councils the tools and resources they need to be able to tackle rogue landlords and letting agents, arguing that almost a quarter of private rented homes don't even meet the Decent Homes standard.

Part one of tackling rogues landlords and lettings agents is setting up a database, something which Khan can already claim a victory on, as news comes just this week that every one of London's borough councils has voluntarily signed up to be part of the online database. This, he says, is the first step at helping improve standards, with an increase in the use of licensing schemes (with more devolved powers given to the Mayor) and regulation to follow. 

The database makes it easy for renters to conduct their own background checks on their landlord or lettings agent simply by inputting the landlord or agent's name, the rental property address, and the borough. At the time of writing the database has over 250 listings, and this is expected to rise considerably as awareness grows. 

Tenants and other members of the public can also easily report a rogue landlord or agent online. 

The Mayor of London, Sadiq Khan, said: “When I launched the Checker I made it clear unscrupulous landlords and agents would have nowhere to hide. Now, with all local authorities signed up, we have reached an important milestone in protecting London’s renters.

“The rental market in the capital is difficult enough to navigate without a small minority of rogue operators exploiting their tenants. This tool will empower Londoners to make an informed choice about where to live.”

Enforcement

The Mayor has launched a new forum coordinated by City Hall called the London Borough Private Rented Sector Partnership. The Partnership will support councils with their enforcement work by:

  • Enabling them to share information about trends in criminal landlord activity across London;
  • Sharing best practice approaches to enforcement; and
  • Encouraging a more consistent and collaborative approach to property licensing schemes across London, to ensure they remain light touch for good landlords.

Other priorities:

  • Tackling homelessness and rough sleeping - he'd like the Government to conduct an urgent review of welfare reform measures and would like to see extra resources for council homelessness departments
  • Building new homes for Londoners - inventive use of London's available land and 'intervening' in the land market, with public sector landowners leading by example. High density schemes will be encouraged to protect the Green Belt
  • Building high quality, safe homes in inclusive neighbourhoods - supporting low carbon future
  • Delivering genuinely affordable homes - he has a long term strategy for half of all new build home to be genuinely affordable. He will fast track developments which meet affordable development quotas. He will also invest £4.82bn funding to support 116,000 affordable home starts by 2022
  • Build to rent - support will be provided to increase number of Build to Rent homes
  • Address the construction skills gap
  • Like for like replacement of demolished affordable homes
  • Replace homes sold through right to buy

Of course, all of his plans rely on the cooperation of councils, housing associations, enforcement agencies, and private developers and it will be interesting to see how the rest of the strategy unfolds, and if the fast pace with which he has begun continues.