MortgagesMay 4 2016

Housing battleground: How London mayor hopefuls stack up

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Housing battleground: How London mayor hopefuls stack up

As Londoners go to the polls tomorrow (5 May) to decide their next mayor, the Council of Mortgage Lenders has warned about potential conflicts between different housing initiatives, market instability and unintended consequences.

London faces housing challenges unique to the rest of the UK, making property the key battleground from the start of the mayoral campaign.

The CML pointed to data from the Department for Commuities and Local Government from 2011, which revealed people living in the capital had the highest incomes in the country - and the greatest average wealth - yet only around half the population were owner-occupiers, compared to around 64 per cent for the UK as a whole.

“A corollary of this is London has the highest proportion of people living in private rented accommodation,” CML spokesman Bernard Clarke said. “It also has the highest rents and the highest current rate of rental growth.”

Candidates compared: Housing

Candidate

Home-ownership pledges
Labour’s Sadiq KhanWants to build more homes for first-time buyers to part-own, part-rent. Where these homes are built on public land, plans to cut their cost and give “first dibs” to Londoners who have rented for more than five years. Also wants to use the mayor’s powers to promote building on brownfield sites and proposes to provide “high-quality advice” on service charges and lease extensions.
Conservatives’ Zac Goldsmith Wants homes built on mayoral land to be ring-fenced for Londoners and proposes people should be able to buy off-plan through a new “mayor’s mortgage” - which would have an offer period of nine months.
Liberal Democrats’ Caroline PidgeonWants to set up a new London Housing Company to match public land with funding from institutional investors. Would also like to introduce a ‘right to buy’ scheme for existing tenants when a private landlords sell up.

The Office for National Statistics most recent data showed rents were rising at an annual rate of almost 4 per cent in London, compared to less than 3 per cent in the east of England, the region with the next highest rate of growth.

With the introduction of Help to Buy London and other initiatives proposed by mayoral candidates, complexity may become an even more marked feature of the London market than elsewhere in the UK, cautioned the CML.

“Whoever is elected mayor, we would like to ensure this matrix of schemes and initiatives is developed and implemented in a streamlined and co-ordinated way,” it stated. “While welcoming measures to promote home-ownership, we are keen to ensure that their range and complexity does not increase the potential for market-distorting effects and unintended consequences.”

Candidates compared: Renting

Candidate

Private rented sector pledges
Sadiq KhanWants a London “living rent” based on one-third of average local incomes. Also looking at a not-for-profit lettings agency and stronger rights for tenants over matters like the length of tenure, rent increases and quality of accommodation.
Zac Goldsmith

Wants to change planning rules to produce more homes for rent and encourage provision through a build-to-rent initiative, rather than buy-to-let model. States a goal to deliver more private rented accommodation through large, purpose-built developments managed by professional landlords over the long term. Suggests strengthening the London Rental Standard, with three-year tenancies offered as standard and lower estate agents fees.

UKIP’s Peter WhittleWants to apply punitive council tax rates to empty homes in London - at twice the rate applied outside the capital - to encourage owners to let them out to private tenants, but opposes caps on rent and the registration of private sector landlords.

In terms of the private rented sector, the trade body called for a regime that reinforces stability, encouraging both lenders and landlords to increase the number of homes available to tenants.

“Many of the challenges for the lending industry lie in the sheer diversity of proposals, and the potential for conflict between different initiatives, market instability and unintended consequences,” Mr Clarke added.

Simon Gammon, managing partner at Knight Frank Finance, welcomed the fact that housing would be a top priority for the new mayor, but also raised concerns that new proposals could just lead to more layers of complexity for borrowers and advisers to deal with.

“We want new policies that either replace, or are properly joined up with, what’s already in place. Whoever wins must engage with central government, the PRA and the CML to make things easier for consumers.”

peter.walker@ft.com