Mayor will consider making product a ‘preferred tenure’ in London Plan – meaning councils must support the tenure in their own local plans
City Hall has defended Sadiq Khan’s new intermediate rental product for key workers in the face of sector concerns that it may complicate the intermediate rental market.
The mayor this week published his response to sector feedback on a consultation paper outlining plans to introduce a new Key Worker Living Rent (KWLR). Under the proposed product, rents and service charges would be capped at 40% of average key worker household income after tax by London borough and then be allowed to increase each year in line with inflation.
The report into the consultation feedback said respondents, including housing consultants, developers and providers, thought a new tenure would “unhelpfully complicate intermediate rent”. It said they thought a “proliferation of models of intermediate rent detrimental to investment and supply” and “confusing for prospective tenants”.
The respondents suggested the existing London Living Rent could instead be modified to help key workers but City Hall said the mayor cannot do this without amending the current London Plan.
In its response, the Greater London Authority said: “By introducing a new tenure, which he [Khan] will consider making a preferred tenure in a future London Plan, he can encourage investors, developers and providers to start building homes for long-term rent, with rents and service charges linked to key workers’ incomes, ahead of issuing a new draft London Plan.
“More fundamentally…he considers there is value in supporting various types of intermediate housing.”
Khan, who pledged delivery of rent-controlled affordable homes for key workers in his 2024 election manifesto, also this week pledged to start 6,000 KWLR homes by 2030.
If Khan makes KWLR a ‘preferred tenure’ in a future London Plan councils would be required to support the product in their own local plans.
According to the report on the consultation on proposals for KWLR homes published this month, around two thirds of respondents “supported a clear definition of KWLR being included in planning guidance.” A consultation on the London Plan last year mooted the introduction of KWLR into planning policy.
At-a-glance: Key Worker Living Rent
Under this product, which City Hall consulted on last year, the GLA will publish borough-level benchmarks for local incomes.
Rents and service charges will be capped at 40% of average key worker household income after tax by London borough.
After letting the homes for the first year, providers would then be able to increase rents by up to CPI plus 1% a year, similar to the way social housing rents are permitted to increase
Alongside promoting consistent decision-making and helping developers secure planning consent for KWLR homes, respondents also “felt defining KWLR in planning guidance and policy would usefully clarify its status, relative to other affordable and intermediate tenures.”
The report stated: “This point was made by those concerned that it might displace social housing, as well as those concerned that social housing might displace KWLR. Some respondents also suggested this clarification is important for a new intermediate tenure that stands alongside other more established and viable tenures.”
Respondents to the consultation highlighted a number of other concerns, including the affordability of LKWR properties for key workers on lower incomes. Khan acknowledged that not all key workers will be able to afford LKWR and some will still need social rent.
The equality impact assessment also noted that LKWR may not benefit marginalised groups.
It recognised women and black, asian and minority ethnic Londoners as groups that may struggle to afford the benchmark rent levels despite both being overrepresented in some key worker occupations.
There are also concerns disabled Londoners may also miss out on LKWR homes if the guidance for their delivery does not include accessible homes, with some respondents commenting that intermediate rented units have lower accessibility requirements than social rented properties.
Concerns around housing for migrant workers were also raised as internationally recruited NHS staff do not have access to social rented homes and “often struggle to secure accommodation in the private rented sector.”
Sadiq Khan, mayor of London, said: “Key workers, including teachers, nurses and bus drivers, play a critical role in keeping our city moving, working around the clock to deliver vital public services for millions of Londoners. It is only right that these hardworking Londoners can afford to live in a decent, safe home in the city they are serving.
“That’s why I’m proud to launch my innovative ‘Key Worker Living Rent’ scheme, which will help NHS staff, police, firefighters and others into thousands of affordable homes for long-term rent, saving potentially thousands of pounds each year.”
KWLR homes will be eligible for capital funding via the affordable homes programme and supported affordable homes programme, which consultation documents suggest could be around £140,000 per unit.
They may also be delivered as part of developers’ section 106 affordable housing contributions as well as through private investment.
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