It's not only in London that he has a hammer! (5)
I believe the answer is:
smith
'london that he has a hammer' is the definition.
The answer is a person as well as being a singular noun. This is suggested by the definition.
'it's not only in' is the wordplay.
'not only' becomes 'smh' (I can't explain this - if you can you should give a lot more credence to this answer).
'in' is an insertion indicator.
'it' put within 'smh' is 'SMITH'.
Can you help me to learn more?
(Other definitions for smith that I've seen before include "Metal worker" , "See 14" , "Worker in metals" , "Person who makes things in metal, may be black" , "Adam, economist" .)