Defining affordable rents

MQT on 2016-05-25
Session date: 
May 25, 2016
Question By: 
Siân Berry
City Hall Greens
Asked Of: 
The Mayor


How will you calculate the definition of a true 'living rent' for London?


Answer for Defining affordable rents

Answer for Defining affordable rents

Answered By: 
The Mayor

Sadiq Khan (Mayor of London):  Thank you, Chairman.  As I said in my manifesto, the London Living Rent will be a new type of home aimed at private tenants with rents based on one-third of average local incomes.  This will start to address the gross unaffordability of London’s private rented sector when fewer people than ever are able to save up to access home ownership.  My officers and I are working with partners including housing associations on the details of the London Living Rent and I will publish proposals in the near future.  Rest assured that these homes are just one part of a package of genuinely affordable new homes for Londoners, including new homes for social rent and for shared ownership.


This is in marked contrast to the previous Mayor, who did nothing - literally nothing - to help private renters and who enthusiastically supported the Government’s damaging Housing and Planning Act, which replaces proper affordable homes with homes costing up to £450,000.


Sian Berry AM:  Thank you.  I would also like to offer my congratulations on your election.  It was interesting to hear during the election that your father was a bus driver.


I do not know if you noticed that I am a private renter myself and so this is an issue very close to my heart.  I know that you have said one-third of average local incomes and a simple calculation based on that is one way of doing this.  However, as a woman, I know that women earn less than men on average.  London has the largest gender pay gap of any region.  Twice as many women as men in London are paying more than half of their income on rent.


Will the work you do on this calculate separately what the implications of the pay gap are for defining a “living rent” for women in the city?


Sadiq Khan (Mayor of London):  The work that the officers are doing is in relation to the various living rents around London, working closely with local authorities and others.  We have not factored in the point you raise in relation to disaggregating the fact that a woman gets on average 81% of the salary a man gets.  Let me look into that because it is a really important point and we need to make sure that we do not inadvertently not give the benefits to Londoners who are women that I intend to give to men.


Sian Berry AM:  Thank you.


Sadiq Khan (Mayor of London):  Can I come back to you on that?  Can we talk about that and maybe what we can do to address that?


Sian Berry AM:  I would be happy to.  Similarly, the costs of living are higher for families in London, including childcare and the still unfair transport fares charged to part-time workers.  The majority of children in poverty in London are living in rented housing as well.  There are more than half a million of them.


Will you take these issues into account - the higher costs of living elsewhere other than rent - when calculating the definition of a “living rent” for family homes?


Sadiq Khan (Mayor of London):  Yes and no.  With the London Living Rent, we are trying to move away from market values of properties towards linking it to what people earn so that it is linked to earnings rather than the market value of a property.  All of the experts - from Shelter to others - say that the definition of a “living rent” should be one-third of average earnings.  There is an argument about whether it should be mean or median.


You are right.  There are 700,000 children in London living in private rented accommodation and so it is a factor in relation to why London has been hollowed out and some of the problems we discussed during the campaign.  However, the London Living Rent is firmly linked to average earnings rather than the living costs that Londoners have.  I am trying to address the issue of, for example, transport costs, which is why I made a promise, which I intend to keep, of freezing fares for the next four years.


Sian Berry AM:  Thank you.  [My question there was] really, though, affordability is a question of what spare income you have to spend on rent and so it is a question of income but is also a question of your other living costs.  I am asking whether you [will try] to take those into account, particularly for families.


Sadiq Khan (Mayor of London):  No, it is linked to earnings.


Sian Berry AM:  Just earnings?  Finally, another group affected by high rents is students.  They are campaigning for a “student living rent”.  Their costs are rising for student accommodation and they have very low average incomes.  Will you work with the Higher Education sector to produce an official figure for a “student living rent” that they ought to be complying with?


Sadiq Khan (Mayor of London):  You will know that it depends where you live in London.  Student digs in some parts of London are cheaper than in other parts of London.  However, we need to make sure that the alliance we are building up includes younger people, some of whom are students, and older students as well.  That is part of the work that the alliance is going to do and that Homes for Londoners is going to do.


Sian Berry AM:  That is, yes, you will look into a “student living rent”?


Sadiq Khan (Mayor of London):  We are going to speak to them, yes.


Sian Berry AM:  OK.  Thank you.  That is it, Chair.