Sadiq Khan likens trying to tackle housing crisis without control over revenue to fighting with one hand tied behind his back

The mayor of London, Sadiq Khan, has urged the chancellor, Philip Hammond, to hand over control of the capital’s booming stamp duty receipts to fund an urgent acceleration in the building of affordable homes.

The Labour mayor described trying to tackle the housing crisis without access to the £3.4bn annual revenue from London home sales as like fighting with one arm tied behind his back.

The Conservatives accused Khan of making excuses for low housebuilding under his leadership, and the Treasury said it had no plans to hand over the cash.

Theresa May urged to force councils to build more homes Read more

London’s stamp duty receipts have soared from around £1bn in 2008/09 to £3.37bn in 2015/16. There was a £340m increase in the last year alone, according to data from HM Revenue & Customs.

With work on only 8,935 affordable homes started in the capital in the year to March, fewer than in all but two of the previous eight years, Khan believes he needs control of the tax to tackle what he described as “the biggest challenge facing our city today”.

To bolster his case, he released figures showing that average private rents in the capital had risen at more than five times the rate of average earnings growth since 2010, and that the gap in house prices between London and the rest of the country became wider than ever in 2016.

He said 40% of nurses and a similar proportion of young teachers in London expected to leave within the next five years because of high housing costs, citing research for the mayor’s housing strategy expected to be published shortly.

“These figures show yet again why the housing crisis is the biggest challenge facing our city today, and I’ve been honest with Londoners from the start. We won’t turn things around overnight. This is going to be a marathon, not a sprint, and we can’t do it with one hand tied behind our backs,” Khan said.

Dear Sadiq: pocket-sized homes are the last thing London needs | Lisa Mckenzie Read more

“The deal I struck last year with government for greater investment in affordable housing was welcome and a vital first step towards tackling the housing crisis, but they must give London greater control over our own resources so we can lead a step-change in tackling the shortage of affordable homes in London.”

Andrew Boff, the Conservative deputy chair of the London assembly’s housing committee, said the cash call was “a distraction from the fact that he has built so few homes and it doesn’t look like we will get a substantial housebuilding programme for several years”.

Boff said there was cross-party support for the mayor to take control of the stamp duty receipts. The same call was made by Khan’s predecessor, Boris Johnson. Boff accused Khan, however, of “laying out his excuses in advance” by suggesting he needed the money to accelerate the buidling of affordable homes.

“The Treasury is not going to hand out money without a robust case that it will be spent how intended,” said Boff. “Sadiq’s plans consist of percentage figures and aspirations rather than firm targets and methodologies for spending the money.”

A Treasury spokesperson said: “London is receiving over £3bn to start delivering over 90,000 affordable homes by the end of 2020-21 as part of the London affordable housing settlement announced last autumn, and we are already using stamp duty receipts to boost the affordable homes budget.”

Tony Travers, a director of LSE London, said Khan should be given control of not just the stamp duty receipts but also, more importantly, the rates at which the tax was set. He said any handover of the tax would almost certainly be offset by reductions in other government funding, but he predicted the London mayor could raise more stamp duty by applying it more specifically to local circumstances.

“It would be a huge piece of devolution which I am sure other city regions would immediately ask for and why not?” he said.