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Khan reveals London has 270,000 homes un-built but with consent

London’s Labour mayor Sadiq Khan says some 270,000 homes in London have been granted planning permission but have not yet been built - 70,000 were approved in the past year alone.

In his ‘City For All Londoners’ document released this week, Khan says the capital is facing a housing crisis and that only around half the homes required to meet the city’s housing needs have been delivered in recent years. 

“First-time buyers in London have a median average income of over £55,000 per year and put down a median average deposit of £70,000. This means that many of those who can afford to buy rely on parental support or inheritance, which can entrench wealth inequality across generations and limits opportunity” Khan writes in the document.

Khan - who elsewhere in the document says he supports landlord licensing by individual borough councils and wants more Build To Rent institutional investment in the lettings sector - goes on to say that he wants “a strategic, London-wide target for 50 per cent of new homes built in London to be affordable.”

He says that in 2015 only 13 per cent of the homes given planning permission were ‘affordable’, using the definition given by the current London Plan. “Clearly we need a substantial increase in the overall number of homes in London, and affordable homes in particular” Khan insists.

The mayor says Transport for London may provide 75 sites for housing; others will come from the Metropolitan Police. He says he also wants to encourage SME housebuilders as well as the volume providers.

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    If permission is being given, but builders aren't building why not introduce a penalty system? Build, complete, and sell within 2 years, or not only lose the permission to build, but fine for not building?

    No point handing out permission to build if it's not going to happen. Why bother?

    If landlords have to pay slab tax on BTL properties, and they are offering housing- why can't non-builders pay the same on the value of non- builds? Is a 3% slab tax on what should have been built going to be a good enough incentive to 'get on with the job' or release the land to let someone else 'get on with it?'

    Jon  Tarrey

    Agreed with your first point. There needs to be some kind of financial deterrent - as you say, a penalty system maybe - to stop housebuilders and developers sitting on land.

     
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    This was reported on a national scale earlier this year. If I recall the HBF looked it into and found that only a very small number of the consents were viable, one of the principle reasons being the S106 demands of the local authority.

  • Jon  Tarrey

    All sounds perfectly reasonable from Sadiq. It's quite refreshing, after years of the Boris show and his dismal record on housing (luxury apartments excepted), to have a Mayor who at least seems willing to accept there is a problem and go about tackling it.

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    Trying to understand how an increase in PRS / build to rent development will aid the shortage of housing for Londoners to buy? Surely just further restricts supply of homes to purchase? Can anyone enlighten?

    And on the rental side, a move towards build to rent / PRS, many of such projects funded and built by US pension funds and the like, is there a rent cap/guide in place by UK/london councils? Seems like lots and lots of rental properties owned and operated by a handful of big companies, not good for London renters?

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    • 25 November 2016 19:00 PM

    The HBF also found that a large proportion of the uncompleted permission belonged to owner-occupiers who appeared to have a multitude of reasons for not proceeding: perhaps they just wanted to establish the principle of development, sit on it for three years, then re-apply for a new application and wait until the tax situation or their personal finances improved; perhaps they didn't have the money, confidence or experience to follow through, and couldn't find a small builder or developer prepared to take the project on because it was unviable financially; and so on.

    Most professional developers, large or small, want to get building, provided they can get finance, find a builder, and provided the S106 and/or CIL and social housing demands don't make the site unviable. On medium to large sites there can also be years of paperwork to get through, in-between securing outline permission and starting construction, so there's understandably a long lag between a permission being issued and the houses actually being built. Large builders and their financiers also have acute memories of 2007-09, when they nearly went bust, so they are only going to build at a rate that is sustainable and doesn't overstretch.

    What the construction industry lacks is capacity: there are too few small developers able to bring in new capital, labour and ideas, in order to expand the rate of construction. They can't find the sites and they can't find anyone prepared to lend them development finance.

    What we need is a mechanism for people who have small planning permissions to be forced to explain what they are doing with their sites, and if they haven't started construction within two years, they should be required to auction off the sites to other people who do have the requisite enthusiasm and financing to finish the job. This could create a boom for small developers and custom-build construction, as people with sites and those willing to build and those wishing to buy are enabled to contact each other.

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