Sadiq Khan has been criticised over plans to turn Transport for London into a corporate landlord despite supporting a national rent freeze.
The London Mayor wants to more than double the income from Places for London – known as “The TfL Property Company” – over the next six years. The £1.5bn subsidiary generated £75m last year, which Mr Khan intends to raise to £187m by 2030.
To achieve this Mr Khan needs to more than quadruple the number of rental homes on TfL’s books, from 4,000 to 20,000, by 2031. Profits would then be 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.
As part of his campaign for re-election, 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 said: “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.
Transport for London (TfL) is one of the capital’s biggest landowners, generating millions of pounds in rental income from retail and work spaces in and above its stations.
Other major cities have successfully subsidised transport for years. In Hong Kong and Tokyo, apartments built above every station help to lower fares. In Tokyo, it costs 180 yen (£0.94) to travel up to six kilometres. A comparable trip in London with an Oyster or contactless card costs £2.80 – triple the price.
Meanwhile, the Paris 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).
Low fares and rent caps
Reinvestment was the original reason for turning TfL into a corporate landlord and experts are sceptical about how Mr Khan can balance that with his promise to cap rents.
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.
Previously called “TTL Properties Limited”, it was incorporated in 2014 and became financially independent of TfL two years ago. In the summer of 2022, it secured a £200m revolving credit facility to help with “short-term liquidity challenges”.
