London mayor, Sadiq Khan is offering increased grant rates for housing associations willing to boost their delivery of affordable homes.
The move comes after they told him that they are reaching the limits of what is possible by cross-subsidising affordable housing through market activity.
In an attempt to tackle the problem, the London mayor is putting some of the additional £1.67bn secured in the Spring Statement this year into offering £70,000 per social home for any additional starts by housing associations, up from the existing level of £60,000.
Housing associations in London already have a certain number of homes allocated to them under the mayor’s grant programme, and this increased grant rate will be available for any homes associations start over and above those initial allocations.
In addition, if an association does not increase the overall number of homes on a site, but does improve the proportion of those homes that are affordable, it can access the improved grant rate for any of the additional affordable homes.
The increased grant regime applies to any starts that occur through to March 2022 and City Hall is encouraging housing associations to bid for the increased rates by 30 September 2018.
Although City Hall is also offering an increased grant rate for London Living Rent and shared ownership, James Murray, deputy mayor for housing, has said that he expected the majority of the funding to be spent on social housing.
The mayor’s new council housebuilding programme, which is offering local authorities a grant rate of up to £100,000 per social home, is funded from the same £1.67bn pot, and City Hall has no preference as to how this is split.
Mr Murray said: “We’re leaving it open at this stage to see what bids come in. I’ve been meeting with council leaders in the last few weeks since the prospectus came out, since the elections, and council leaders are really keen to get on and build more council housing, which is very positive. “We’ll be speaking to the G15, to medium-sized and to small housing associations about how they can spend this money, and I’ve been very encouraged by what some of them have informally said to us so far.”
The news has been greeted positively with Paul Hackett, chair of the G15 group of London’s largest housing associations saying: “Higher grant levels are critical in enabling housing associations to build more of the affordable homes that Londoners need, so this £10k boost is welcome. “In the longer term it’s clear that grant rates need to continue to grow if we want to really unlock London’s affordable housing potential. G15 members will be working with the Mayor’s team to help make the case for further investment in London’s affordable housing needs.”