Britain's new London Mayor Sadiq Khan at...Britain's new London Mayor Sadiq Khan attends the Yom HaShoah Commemoration, the UK Jewish community's Holocaust remembrance ceremony, in Barnet, north London, on May 8, 2016. London's new Muslim mayor Sadiq Khan accused Prime Minister David Cameron on Sunday of using "Donald Trump playbook" tactics to try to divide communities in a bid to prevent his election. Khan won 57 percent of the vote in the May 5 mayoral election, securing 1.3 million votes to see off multimillionaire Tory Zac Goldsmith and making history as the first Muslim mayor of a major Western capital. / AFP PHOTO / LEON NEALLEON NEAL/AFP/Getty Images
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Mayor Sadiq Khan has allowed Transport for London to sell a site to developers for less than market value so that more affordable housing could be built on the land.

Although the decision applies only to the four-acre site near Greenwich it provides an indication of the new mayor’s approach to affordable homes and highlights his determination to tackle the city’s housing crisis.

TfL is required by law to behave like a private company when it develops land, and public sector organisations in general are supposed to secure the best price when they sell land.

However, this could conflict with Mr Khan’s election promise to boost the supply of affordable housing in London, which reduces the value of land to property developers.

In relation to the site beside Kidbrooke station, in the borough of Greenwich, a briefing document for the mayor stated: “The requirement that the land is developed with 50 per cent affordable housing will reduce the land value significantly.”

That amount of affordable housing is much higher than a typical housing development in London.

TfL obtained written permission from the mayor because its “functions and purposes are to provide transport to, from and within London, and do not include housing functions”.

Mr Khan, on the other hand, “has wider functions in relation to the promotion of social development, economic development and wealth creation as well as specific responsibilities for housing in London”.

“There is a question as to whether, in the absence of a direction, TfL would be entitled to adopt a financially disadvantageous approach to disposal or development on the basis of advantages related to the provision of housing.”

Details of the mayoral decision document were first reported by the MayorWatch website.

TfL said the land, which it owns jointly with Network Rail, could accommodate 400 homes as well as 5,000 sq ft of commercial space. The land was part of an RAF base, then was used when the A2 road was being built and has since lain largely unused. It is one of many plots of public land that the mayor hopes to use to boost both the supply of homes and of affordable housing in London.

TfL is under financial pressure because its government funding is being cut and Mr Khan has promised to freeze fares in cash terms.

“Getting homes built on public land can be hard,” Mr Khan said. He said the TfL site was one of many that “have been allowed to languish unused for far too long. This site in Kidbrooke will be the first of many we are fast-tracking to build genuinely affordable homes for Londoners.”

Anne Bowden, a property lawyer and partner at Pinsent Masons, said it was not unusual for public bodies to dispose of land for less than the best price.

Keith Prince, the Conservative transport spokesman on the Greater London Assembly, said: “Selling Transport for London’s land with a massive 50 per cent affordable housing requirement ensures it will be sold for well under market value.

“Sadiq should have checked if selling TfL land for under market value was legal before promising this requirement,” Mr Prince said. “Not only could it have legal repercussions, it is bad for an organisation that has a £640m Khan-fares-freeze sized hole to fill in their budget.”

Separately on Tuesday, Mr Khan said he was hiring a team of surveyors and other property experts to scrutinise viability assessments, which are the financial details that underpin how much affordable housing is included in new developments.

Sean McKee, of the London Chamber of Commerce and Industry, said: “The housing crisis in London is of utmost importance to those who live and work in the city, and so efforts to cut red tape and bring forward public land for development are welcome.”

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