London housing: TfL land set for affordable homes as Sadiq Khan picks expert team

London mayor Sadiq Khan has announced two forward steps on his long and testing quest to improve the supply of new homes for low and middle income households. One is the release for development of a piece of Transport for London (TfL) land in Kidbrooke. The other is the start of assembling his expert Homes for Londoners unit at City Hall.

The Kidbrooke site is the first brought forward by TfL under Khan’s manifesto pledge to supply “part-buy, part-rent” shared ownership homes on publicly-owned land for first-time buyers, giving “first dibs” to Londoners who’ve been renting for five years, especially in Outer London. It demonstrates both continuity of policy from what TfL did under Boris Johnson and significant adjustments of it.

The transport body’s approach to making money from its developable land assets has been be to enter into joint ventures with developers to build housing and other things - schools, shops, medical facilities - on it, enabling TfL to take a share of the profits. The first example of this new departure for the transport body was the vast and controversial Earls Court Project - find seven years’ worth of mildly obsessive coverage here - which has so far seen the TfL land on which the Earls Court exhibition centre stood levelled and precisely no affordable homes, however defined, planned for it.

Here is where Khan differs from his predecessor. TfL’s first priority under Johnson was to make as much money as fast as possible from its property deals: hence the zero “affordable” portion in the Earls Court redevelopment so far and a concentration on sites in expensive areas. Khan, by contrast, is to insist that an overall 50% of all homes built on TfL land must meet his definition of “affordable” - to be a more stringent one than the government uses - and has asked TfL to move more sites in Outer London up its priority list. Kidbrooke fits the bill.

The land, which lies next to Kidbrooke railway station, is big enough for around 400 homes plus retail, commercial and open space. During the mayoral election campaign, Khan spoke of TfL retaining ownership of its land, which is usually advisable in any case since it tends to contain useful public transport stuff like stations. In this case, however, the land isn’t needed for TfL transport purposes which means it could be sold rather than retained.

Such a sale could be to the highest bidder on the open market but, that high price would make it unlikely that 50% of any homes built on it were affordable, especially by Khan’s definition. However, the land can also be sold to a company that TfL is part of, logically at a price low enough to make 50% affordable financially feasible. According to paragraph 2.4 here it is “contemplated that TfL will dispose of the land to such a company.”

An issue raised by a 50% affordable requirement, the minimum set out by Khan for the Kidbrooke site, is that TfL will get less from the development of the land in this way than they would have were the “affordable” proportion lower. City Hall officers’ advice to Khan is that were TfL itself or a subsidiary of it developing the land for less than the maximum possible return, it would be breaking the law in the form of the GLA Act, but that those provisions don’t apply to a non-subsidiary, such as a joint venture company. Khan has therefore formally directed TfL to sell or develop the Kidbrooke land by means of such a company, which will likely be formed with one of the 13 developers named in TfL’s property partnership framework in February.

All this has brought criticism from Conservative London Assembly member Keith Prince, who speaks for the Tory group on transport. He has accused Khan of financial irresponsibility, saying his approach threatens TfL’s finances at a time when Khan is also freezing its fares income and the government is phasing out its grant. Planning applications for the development of TfL land and made by TfL itself under Mayor Johnson have contained proposals for affordable housing - at Nine Elms, Northwood and Parsons Green. The proportions in each case have been for substantially less than 50%, but still implied a smaller return for the transport body.

Khan has said that Johnson hadn’t pushed TfL to move on the Kidbrooke site (although it has long been a contender for attention), the implication being that the transport body is already in line to be better off than it would have been under the previous mayor and that 200 more affordable homes will soon enter the supply pipeline too. Ensuring speedier housing delivery on is one way in which Khan can address the tension between TfL’s need for additional income and his commitment to building affordable homes on its land portfolio,

And so to the second of Khan’s housing announcements. The Homes for Londoners line-up includes a “governance board” comprising Khan’s housing deputy James Murray, four borough leaders to be nominated by London Councils, TfL commissioner Mike Brown, the Greater London Authority’s executive director housing and land David Lunts, chair of the G15 group of leading housing associations David Montague and two “members of the residential property sector” who have yet to be named. Khan himself will chair the board, which will meet quarterly. The clear objective, in keeping with Khan’s manifesto, is to form an alliance of all those with an interest in building London homes.

Khan has also announced that he’s assembling an in-house “viability expert team” to look closely at the often contested financial costings compiled by developers to justify the amount of “affordable” housing and other social infrastructure they supply as part of development schemes. The thinking is that cash-strapped boroughs are often bamboozled by property giants and end up getting less affordable housing out of deals than there could have been.

Having a stronger viability scrutiny operation at the service of the mayor, who can block, shape or even take over the determination of planning applications, should help the boroughs and also promote greater consistency in viability negotiations - something it is hoped developers themselves might welcome, as the process can be costly and time-consuming for them too. The same experts will also help Khan develop his new London Plan and shape major parts of mayoral planning policy, such as opportunity areas and housing zones.

The initiative has been welcomed by London Councils, business body London First and the London Chamber of Commerce and Industry, reflecting broad agreement that London’s housing problems need to be tackled with greater interventionist vigour. Khan is hoping that Theresa May will join the chorus of agreement. Her chancellor’s autumn statement is awaited with interest.