Labour candidate Sadiq Khan is London’s new mayor after claiming 56.8% of votes to defeat Conservative opponent Zac Goldsmith. Having won the vote, Khan will pursue his promise to construct 80,000 new homes a year and make 50% of them affordable. For London's councils, how will this impact their budgets?
Housing the top issue
Before the mayoral election, a BBC poll revealed Londoners considered housing the most important challenge facing the city. In the results, housing was top at 56%, finishing ahead of immigration (38%), security against terrorism (26%) and healthcare (23%). Given this situation, both Khan and Goldsmith prioritised the housing issue in their campaigns.
Goldsmith pledged to construct 50,000 homes annually, while Khan made the bigger promise of 80,000 – a figure the Conservative candidate was aiming to work towards after 2020. Either way, both wanted to surpass the 23,840 yearly average under former mayor Boris Johnson.
The challenges facing Khan
Khan seems to have won over many Londoners with his pledge, but experts believe the new mayor will encounter difficulties in coming close to his annual targets. Guy Grainger, UK Chief Executive of financial services firm JLL, said: “There aren’t currently enough builders out there to build 50,000 homes”.
In regard to financing, London School of Economics Professor Christine Whitehead believes Khan’s affordability-driven approach “would make many sites financially unviable”. Going against Whitehead, the Housing and Finance Institute (HFI) estimated in an April 2016 report that London’s boroughs have approximately £1 billion of housing revenue to spend.
The HFI's report also stated that the City has room for more than one million new homes through “better land use”, citing Madrid and Paris as good examples of this. However, this could require councils to purchase built-upon land and incur additional costs.
Initially, HFI research suggests Khan will have £1 billion to fund the early stages, but the vast growth needed to raise Boris Johnson’s annual numbers could cause financial strain in the years ahead. In turn, this would increase budgetary pressures on councils. Fortunately, Enforcement Agents like Dukes Bailiffs are skilled in ethical debt recovery and can help local authorities maintain healthy cash flows. Contact one of our representatives today for expert guidance.