On Thursday, May 2, 2024, Londoners headed to the polls for the Mayor election. A few days later, the news hit: Sadiq Khan secured his third term. But what does this mean for the London housing market? With rents soaring, property prices out of reach, and a shortage of affordable homes, Khan's re-election could set the tone for housing in the city. From building more council houses to cracking down on dodgy landlords, Khan's plans could help reshape London's housing scene. Let's dive in and explore what his victory means for Londoners hunting for a place to call home.

The London housing market is under high tension

The London housing crisis is a real challenge that has been made more complicated by rapid population growth, limited housing supply, and skyrocketing property prices. With a population exceeding 8 million and growing, London faces great pressure to accommodate its residents, resulting in a severe shortage of affordable homes.

One of the primary causes of the housing crisis is the difference between housing demand and supply. Despite efforts to increase construction, London's housing market struggles to keep up with the city's expanding population. This imbalance has led to soaring property prices and rents, making it increasingly difficult for people living in London to find affordable homes.

On top of that, the affordability gap is widening, with many low and middle-income earners priced out of homeownership and facing the prospect of insecure or inadequate housing. This situation not only undermines the quality of life for individuals and families but also increases social inequality and slows down economic productivity.

How expensive is the London housing market?

Earlier this year, new data from Rightmove showed that the average monthly rent in London hit a whopping £2,633. Rental costs have increased so much that in some cases, London renters can save money when buying a home. If you're a first-time buyer scouting in the city, Halifax found that the average price is around £492,200. So, if you're just kicking off your savings for a deposit, keep that number in mind—it's over the current price cap for a Lifetime ISA, which could mess with your tax-free savings plan. With a Lifetime ISA, aimed at hopeful homeowners, the property's price can't exceed £450,000, setting a kind of spending limit for those aiming to buy.

According to Rightmove, flats in the city went for an average of £569,405 in 2023. Terraced houses came in at around £836,509 on average, while semi-detached homes went for about £831,044. These stats paint a picture of London's bustling housing market—full of hustle and bustle, with options for everyone, but definitely not cheap!

What are Sadiq Khan’s housing policies for the coming years?

Following his reelection as London Mayor, Sadiq Khan is rolling out an ambitious agenda to tackle the city's housing issues head-on. At the heart of his plans is a promise to kickstart the "biggest council housebuilding effort in decades," aiming to deliver 40,000 new social homes by 2030. This initiative isn't just about easing the stress on affordable housing, it also includes a promise to provide 6,000 rent-controlled homes tailored for essential workers in London.

Khan's also vowed to be strict with landlords who don't respect regulations, pledging tougher penalties that could see tenants reimbursed with up to two years' worth of rent in cases of severe landlord misconduct. These commitments reflect the Mayor of London's dedication to addressing London's housing crisis from different angles to create an better and fairer housing market for all Londoners.

More council homes to be built according to Sadiq Khan's programme to combat the London Housing crisis

What has Sadiq Khan done so far to combat the London housing crisis?

Tackling the housing crisis in London has been a key area of focus for Sadiq Khan since it's one of the biggest issues faced by the capital city. The Mayor's office recently explained that "since 2016, more than 32,000 council homes have been started in London, with 23,000 directly funded by City Hall. This compares to just 3,520 council homes started in London in the entire decade before Sadiq become Mayor". Under his "Homes for Londoners Programme", Sadiq Khan, has spearheaded various initiatives to address the pressing issue of housing affordability and availability in the city. Two main affordable homes schemes have been created as a result of this work.

London Living Rent

One of the cornerstones of the Homes for Londoners programme is the London Living Rent scheme. This initiative is designed to provide affordable rental options for middle-income Londoners who are often priced out of both social housing and the private rental market. Under this scheme, rents are set based on one-third of the average household income in the area, making them significantly more affordable than market rates.

Through the London Living Rent scheme, Sadiq Khan has worked to ensure that key workers such as nurses, teachers, and emergency service personnel can afford to live in the city they serve. By offering stable, affordable rental options, this initiative helps to mitigate the effects of rising housing costs and fosters social cohesion within London's diverse communities.

Shared Ownership in London

In addition to the London Living Rent scheme, Sadiq Khan has championed the expansion of Shared Ownership in London. Shared Ownership enables first-time buyers and those with modest incomes to purchase a share of a property and pay rent on the remaining portion. This model provides a pathway to homeownership for individuals who may otherwise struggle to afford a property in London's competitive housing market.

Under Sadiq Khan's leadership, Shared Ownership has seen increased investment and support, with the aim of making homeownership more accessible to a wider range of Londoners. By facilitating partnerships between housing associations, developers, and local authorities, this initiative helps to create a more inclusive and diverse housing market, where ownership is not limited to a privileged few.

If you are interested in learning more about London Living Rent and Shared Ownership, you can check out our alternative ways to buy a home.