London Mayor Khan says new planning rules to boost housebuilding

[LONDON] London Mayor Sadiq Khan said new UK planning rules proposed on Tuesday (Mar 11) will help tackle the city’s affordable housing shortage by addressing the “big issue” of land value.

“We are not meeting the demand there is for affordable housing in London, and that’s where we’ve got to ratchet up supply,” Khan told Bloomberg News on Tuesday at the MIPIM real estate conference in Cannes. The Planning and Infrastructure Bill “will make it much more viable to build affordable homes,” he said, because local authorities will no longer need to take into account a property’s “hope value” – an estimate of what it would be worth with planning permission.

“What the government is talking about is removing that speculative value of the land,” Khan said. “You as a developer will buy the land at a cheaper value than would otherwise be the case,” which he says is likely to encourage more investment.

The UK will manage to build only half of the 300,000 homes it’s targeting this year, partly down to weak demand for developers’ affordable units, according to roughly a third of builders in a Knight Frank survey published last month. Khan has faced criticism this year from political opponents for his slow rate of progress on building affordable homes in London.

Khan said in the interview that London needed to build 88,000 homes a year for supply to meet demand, about two times more than the roughly 45,000 it’s completed on average in recent years, he added. Khan defended his overall record on residential development, and said London has “broken records” on home completions during his tenure.

Khan is attending MIPIM – an annual gathering of roughly 20,000 real estate professionals – for the first time in his almost decade-long stint as mayor. His predecessor – and later prime minister – Boris Johnson used to be a regular at the conference.

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In a speech to hundreds of delegates earlier on Tuesday, he described London as “the greatest city in the world to invest in,” and encouraged investors to pour money into build-to-rent, student housing and logistics projects in the capital.

“The advantage of build-to-rent is good quality of landlord, good quality accommodation,” and reasonable rent increases, he said. “We don’t want young, ambitious professionals leaving London.”

Khan told delegates that “all Americans are welcome,” signalling that he views US investment as a route to boosting development. He joked that the stand dedicated to London at MIPIM was bigger than the offerings from Rome or Berlin, in one of many comments designed to boost the UK capital’s appeal to investors. Still, it was dwarfed by the one put up by the Saudis. BLOOMBERG