Sadiq Khan: 'As mayor I'll give first dibs on housing to Londoners'

For Sadiq Khan, running to be London mayor after 10 years as the member of parliament for Tooting in south west London, housing is the number one priority.

“We have a housing crisis in London and for my generation of London politicians, it’s the number one issue,” he says. “Just to give you an idea of how bad things are: the average cost to buy a property in London is £540,000. There are now two million Londoners renting, including 700,000 children, from private landlords.”

Khan, 45, believes that London has been hollowed out – and worries that this is permanent. More families are in rented accommodation than there were a decade ago, while many long-term Londoners are moving further out of the city as house prices in the centre soar.

He argues that the definition of affordable housing has been mangled for political expediency. “[Current London mayor] Boris Johnson defines affordable homes as 80% of market value. [Rival mayoral candidate] Zac Goldsmith defines affordable homes as £450,000. Shelter has done some research and in order to afford one of Zac Goldsmith’s affordable homes, you need to have an annual salary of £77,000 and a deposit of £98,000. So I don’t need to say Goldsmith’s out of touch: every time he talks about housing, he knows he is.”

The Labour party candidate’s answer to the housing crisis involves using City Hall powers to push developers into building more socially inclusive homes. If elected, he would set up Homes for Londoners, a team based in City Hall that would fulfil the expectation that half of all new homes built by local authorities and developers are genuinely affordable.

“And when I say affordable, that means a combination of either social rents – and social rents are linked to manual workers’ salaries – or homes where you pay a London living rent (a third of average local earnings) rather than market value of properties.”

The affordability test would be determined borough by borough: the London living rent would be higher in Hackney than Barking, for example, if the average salary was higher.

London property prices have been distorted by wealthy overseas investors from the Middle East and Asia, with houses left empty and used as “asset lockers” rather than homes, says Khan. “We’re going to say ‘first dibs to Londoners’. So councils and developers know that my expectation is that you’ve got to market those properties to Londoners first before you go overseas.”

But many Londoners cannot afford to get on the property ladder. Again, Khan argues City Hall, rather than the government, could help circumvent letting agents and offer a fairer deal. He wants to set up a not-for-profit lettings agency for the whole of London: tenants would be able to avoid getting ripped off by private letting agents and instead be guaranteed a tenancy of up to three years, with rents that only go up in line with inflation.

Is this likely to happen, when the current government has no plans to increase the provision of social housing? “We need to persuade the government to give the mayor of London and local authorities the power to borrow to build. I want to be issuing bonds, using pension funds to build more homes. When you speak to some of London’s leading companies – the Deloittes, the Morgan Stanleys, the FTSE 100 companies – they say they can’t employ staff because of the cost of housing. I’ll say to those big businesses: look, if you want you can invest your money with me; help me build more homes in London. The quid pro quo is your staff can have some of that housing.”

Khan says businesses understand that housing affects London’s economy and, in turn, its workforce. “London First, the group that represents London’s businesses, says the number one issue facing London is housing. The Confederation of British Industry says one of the biggest issues facing London business is housing. The Federation of Small Businesses says one of the biggest issues is housing. My point is, there’s a business case to help solve the housing crisis. Forget the fact you can’t get bus drivers in London, or teachers– you can’t get people to work in the City in London.”

All candidates in the London mayoral race have promised to build more, but where the land will come from in a dense city with such high land values is another issue. Khan says he will use the land already under public ownership, such as TFL land. “There’s plenty of land in London – brownfield sites, hidden properties in council estates. We don’t need to build on the green belt, and I will not build on the green belt.”

Does he want to see more council housing built in London? Khan has not been shy about the fact that he was raised on a council estate. “My dad drove a bus for more than 25 years and my mum sewed clothes to help support the family. The council home gave my parents the security of knowing that in 12 months time a landlord wouldn’t come to ask for a 10% [rent] increase or for them to move out. It was affordable, so they could both put money aside to be able to afford to buy their own home. We need these council rents – we shouldn’t be embarrassed to say that – but we also need homes that are submarket, for teachers, for nurses, for people who won’t be eligible for council homes.

“And that’s why the London living rent is so, so important. I want to be a mayor for all Londoners, rather than Zac Goldsmith, who is going to allow foreign investors to carry on using our homes as gold bricks.”

But with a Conservative government in power, it could be difficult for a Labour mayor to push through Labour policies while funds are centralised. Khan is optimistic. “My argument to London is, you want a champion, you want an advocate, dare I say it, a shop steward for London. That means working with the government when it’s in London’s interest but also, if needs be, arguing with the government. So it’s not in the government’s interests for London to do badly. If London does well, the country does well.”

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