This giant credit rating agency has just issued a warning about Sadiq Khan’s plans to freeze TfL fares
Hmm. Looks like things aren't getting off to a great start for London's new mayor, Sadiq Khan, after one of the world's largest credit ratings agencies warned his central pledge may hurt Transport for London (TfL). That didn't take long…
In a statement that was as brief as it was punchy, this morning Moody's warned that Khan's plans to freeze fares on the Tube, busses and rail for four years – which the Conservatives have warned would cost £1.9bn to deliver – would be "credit negative" for TfL.
Roshana Arasaratnam, vice president at Moody's Public Sector Europe, pointed to TfL's reliance on fares rising.
“If the new Mayor freeze’s fares for Tfl, this would be credit negative as TfL has increasing reliance on fare growth, given reduction in operational funding from central government."
Ooof.
Arasaratnam also pointed out the mayor's housing policies, which include a target to build 50,000 new homes a year, and make 50 per cent of those affordable, may or may not be a good thing for those residing in the capital.
"The impact of the Mayor’s housing policies are less certain and dependent on the mix of affordable and outright market sales London based housing associations would do under a new Mayor," she said.
"Further uncertainty in housing policy might exacerbate an already unpredictable housing policy environment and undermine future development.”
London's house price growth has been muted in recent months, thanks to a heady combination of new rules on stamp duty and anxiety over the outcome of the EU referendum.
Last week figures showed house price growth in the capital's most exclusive postcodes declined to its lowest rate in more than six years during April, largely thanks to that economic uncertainty.
"Higher transaction costs are producing the same distortions in the prime London property market as they do with other assets including stocks and bonds," said Knight Frank's head of London residential, Tom Bill.
"Average holding periods increase, trading volumes decline, prices adjust to some degree and there is a stronger demand for ‘best-in-class’ assets that can be traded more easily."