‘Renters’ champion’ Sadiq Khan’s plan to turn TfL into a £187m-a-year landlord

Sadiq Khan has come under fire over plans to turn Transport for London into a corporate landlord despite openly supporting a national rent freeze.

Transport for London (TfL) is already one of the capital’s biggest landowners, sitting on a portfolio of nearly six thousand acres. For years, it has generated millions of pounds in rental income from retail and work spaces in and above its stations.

But in more recent years a big opportunity has emerged in the shape of “build-to-rent” – a sector where developers and investors are pouring billions into brand new rental housing at a record pace.

Mayor Sadiq Khan wants to more than double income to Places for London – otherwise known as “The TfL Property Company” – over the next six years. The £1.5bn subsidiary generated £75m last year, but by 2030 Mr Khan wants it to be bringing in £187m.

To do this, the Labour politician needs to more than quadruple the number of rental homes on TfL’s books, from the 4,000 it has started to date to 20,000 by 2031.

Profits are then invested in the transport system, forming part of a broader strategy to diversify TfL’s income, offset costs and shield train ticket prices from further increases.

But in a bid to be re-elected as London Mayor, Mr Khan has also promised to cap thousands of rents charged on these new homes by linking them to key workers’ and middle-income families’ salaries.

In a video posted earlier this month on X, formerly Twitter, Mr Khan promised to build 6,000 new “rent control homes”. He told the camera: “While the Tories are in the pocket of the landlord lobby, I’ll be a renters’ champion.”

Places for London collected £58.6m in rents from small businesses last year, and a further £14.6m in parking charges. Two of its directors were also paid half a million pounds between them, which included pension contributions.

Low fares and rent caps

Other major capitals are already ahead of London’s transport network. In Hong Kong and Tokyo, apartments built above every station have – for years – subsidised cheap fares for city goers and visitors.

In Tokyo, it costs 180 yen (£0.94) to travel up to six kilometres. In London, a trip in Zone 1 with an Oyster or contactless card costs £2.80 – triple the price.

In Paris, instead of investing in property the local metro system relies on the Mayor levying National Insurance to keep ticket prices down. In the French capital, a single metro journey costs €2.10 (£1.80).

Experts are sceptical as to how Mr Khan can balance the need to reinvest rental profits into TfL to keep ticket fares down and make them internationally competitive, with his more recent promise to cap thousands of rents.

Reinvestment was, after all, the overriding reason why Mr Khan began to help turn the local government body into a corporate landlord in the first place.

Ant Breach, of think tank Center for Cities, said: “It makes sense for the Mayor to build on land the city owns. But there is only so much land to build on, and so much profit which can be made from it.

“The Mayor has to make a choice – will he use the development profits to support the transport network, or use it to subsidise the cost of the housing itself? You can’t do everything.”

Places for London netted a group loss after tax of £130m last year. In 2022, it had posted a £115m profit and received a £200m cash injection.

Values of the properties on its books have also slipped in the past 12 months by £121m overall, more than offsetting gains of £90m made just after the pandemic.