During his recent visit to New York City, the Mayor of London took the opportunity to announce one of his key pre-election pledges for the private rented sector, the London Living Rent.

Doing so while overseas was both surprising and interesting and his visit to New York highlighted the challenges facing the Mayors of both cities.

With broadly equal populations, high levels of inequality and a huge influx of wealth into each in recent years, both NYC and London face their own housing crises, but each built on different policy backgrounds and housing mixes.

However, each Mayor has very similar limitations – in the sense that they lack adequate powers to either build homes directly or strengthen rent control in the private rented sector.

Instead, they can set the general direction of travel for development in each city and, through planning, insist on the numbers and formation of different forms of affordable housing.

This is what Sadiq Khan is seeking to do through his London Living Rent proposal, which was billed as creating an original form of affordable housing for new developments.

Original proposals set out how it would be pegged at rates equal to a third of local wages, accessible to households on a range of incomes, and available to people who are currently privately renting.

Although this principle is a positive step forward, with the recognition that affordability for private renters is often unattainable in London, the details released last week have raised some serious concerns.

The latest announcement pegs rents to the local incomes of each borough, meaning that the London Living Rent will be significantly more expensive in Kensington and Chelsea than in Newham, for example.

This will entrench existing inequalities across the city and lock lower-paid renters out of the London Living Rent in many parts of the city, as illustrated by the GLA’s own rental map for the policy.

As set out in our recent London policy document, Generation Rent would prefer to have a London-wide figure for rent levels, which would start to allow private renters to find fairer rents across the city, and maintain and revive the mixed communities that have always characterised London.

Furthermore, looking at the detail suggests a number of ways that housebuilders can charge rents that are higher than these local levels. The policy states:

Within boroughs, demand and construction costs can vary widely, so it is further proposed the rent could be varied at ward level by up to 20% above or below the borough benchmark, in line with the variation in ward house prices.

…As an affordability safeguard, the rent for any individual unit should be at least 20% below its assessed market rent.

This is significantly shifting the grounds of what was understood by the policy before the election, and the affordability ‘safeguard’ raises the spectre of Boris Johnson’s much-maligned definition of affordable housing as set at up to 80% of market rates.

In a situation where housing costs have been seriously detached from average wages, any rents based on the market do not connect with genuine affordability.

Generation Rent has already raised questions about the scale of this intervention, which may help tens of thousands of renters, but leave a wider population of millions without affordable rents.

Even more worrying though, in its current form, there are serious concerns about how affordable the London Living Rent will actually be, and furthermore, whether it will serve to increase inequality and add more expensive rents to an already inflated market.

This blog is the first of two parts, the second looking at the security and tenancy aspects of the London Living Rent.