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News Release

London

JLL UK comments on election of Sadiq Khan as Mayor of London


​Commenting on the election of Sadiq Khan as Mayor of London, Guy Grainger UK CEO at JLL said: "Sadiq has pledged to be the most 'pro-business Mayor of London yet' which is a promising boost for London's position as a global leader. Property is a vital component to consider in any business or personal decision – from the impact that office space can have on workforce productivity, to the affordability of housing & making buildings sustainable.

"Housing is top of the agenda and London will watch with eager anticipation to see if Khan can deliver 50,000 homes per annum and we will help him try to get there. Khan's focus on affordability was a popular vote winner but the real test will be the delivery of these homes at a time when the capacity and cost of construction industry is so testing.

"We wholeheartedly support Sadiq's London First commitment, but off-plan investors from all around the world are still vital to underwrite development finance and get construction happening."

 

Chris Ireland, UK Chairman and incoming JLL UK CEO, said: "Sadiq Khan has said that he is determined to be the most 'pro-business Mayor of London yet.' It will be interesting to see the impact of his ideas, especially in relation to aviation capacity and seeking additional fundraising powers from the Government for major infrastructure projects. 

"In a recent JLL investor sentiment survey, 55% of respondents said that they planned to increase their exposure to commercial property, highlighting the resilience of the asset class. Competition for investment is increasingly between cities rather than between countries. To keep London at the forefront of this it is important that the city is seen as open for business. City success is no longer purely about size or inherited attributes, but also about adapting to new trends and seeing the value in technological and infrastructural innovation. Bold urban transformations that meet London's demands of rising populations and increasing strains on resources are also needed."

 

On implications for housing in the capital, Adam Challis, Head of JLL Residential Research, added:

"Sadiq Khan has committed to delivering more affordable housing and to giving Londoners 'first dibs' on those homes.  He has said he will introduce a 50 per cent affordable housing target for new developments, and use mayoral planning powers to stop 'buy-to-leave'.  He has also vowed to stop homes being sold off in advance to foreign investors. In reality, however, there is little evidence of 'buy to leave' actually happening, and restricting demand is a quick way to compromise the viability and deliverability of new developments.  The industry is already signed up to the mayor's 'London first' concordat for sales, which commits to give Londoners first option on new homes in the capital and which we wholeheartedly support.

"Ultimately domestic demand is not strong enough to drive off plan sales rates, so the issue here is that action to restrict overseas investors would simply destroy the viability of most schemes, and would reduce, not increase, the level of affordable housing delivery.  We should remember that Ken Livingstone had this aim and never got close to implementing it.

"Under Sadiq's plans, the £400 million 'left' in this administration's affordable homes budget will be used to support housing associations in their plans to deliver more homes.  London would benefit and the intent is commendable, but there again remains a question around the industry's ability to deliver.  Constructions costs alone are increasing by around 8 per cent each year (driven by labour and materials shortages), which makes higher supply scenarios challenging to say the least.  Similarly the plan to bring forward more land owned by public bodies like TfL, and to use the Mayor's new homes team to develop that land, would be universally supported across the industry if it makes commercial sense.

"Sadiq has a number of other plans revolving around creating a living rent, setting up a not-for-profit lettings agency to promote longer-term stable tenancies for responsible tenants and good landlords, and introducing a landlord licensing scheme. All of these policies may be beneficial to the market, but cost, process and regulatory challenges would pose hurdles to overcome.

"There is no doubt that the next Mayor will be committed to alleviating the severe housing difficulties London faces. There is also no doubt that there are many promising ideas however it is not for shortage of ideas that London finds itself in this situation. Rather, it is the deliverability of those ideas which matters most in a market where competition for funds is aggressive, where processes can tie up opportunities and where local and international interests may be at odds. Any Mayor who can work with the grain of the market to create long term and lasting solutions will make genuine progress in addressing London's housing provision problems.  Sadiq has promised to be the most pro-business Mayor yet, if he holds to this the development community will play its part in addressing the supply challenge"

John Duckworth, Head of JLL Occupier Services, said: "The new mayor needs to continue to support and invest in London's position as a leading global city. Decanting more fiscal autonomy from central government in line with other global cities such as New York, will be an important responsibility of the new mayor's office. London needs a mayor who will further support finance and the creative sectors and grow new ones like technology and life sciences. The bigger picture stuff will arise in June when we know the outcome of the EU referendum. Firms that have been waiting on the side-lines will finally be able to set the wheels in motion and begin making decisions."