Government’s £4 billion ‘affordable homes’ funding offer gets cool response

Government’s £4 billion ‘affordable homes’ funding offer gets cool response

The government has offered London £4 billion from its next five-year Affordable Homes Programme funding for England to come into effect next year – a sum smaller than City Hall says it needs for just one year if the number of homes priced below market levels the capital requires is to be supplied.

In a muted response to the announcement made by communities secretary Robert Jenrick today, a spokesperson for Sadiq Khan pointed out that Greater London Authority (GLA) research has found that the capital needs £4.9 billion every year in order to help deliver the quantity and range of “affordable” dwellings needed and confirmed that “The Mayor’s team are continuing negotiations with the government to seek to ensure that our city has the tools and resources it needs to build the affordable homes Londoners deserve as we recover from the pandemic.”

A total of £11.5 billion for affordable homes in England will be allocated for 2021-26. Inside Housing reports that the £7.5 billion for other parts of the country is £2 billion more than is available outside the capital under the current programme. The government says the £11.5 billion will produce “up to 180,000 new homes across the country, should economic conditions allow”.

The GLA, which is responsible for allocating its share of national affordable homes funding to providers of “affordable” housing in London, received government sums in 2016 and 2018 totalling £4.82 billion to contribute to a minimum of 116,000 “affordable” homes of different kinds and levels of affordability in the capital.

London Councils, which represents the capital’s 33 local authorities, concurs with the Mayor that the £4 billion offer falls far short of what is needed. Darren Rodwell, executive member from housing and planning, expressed disappointment that “the government plans to reduce the proportion of investment going towards much-needed new affordable housing in London”.

He stressed that an offer from the organisation to build “50,000 desperately-needed homes in the capital” if the financial support is provided still stands. “We will keep urging ministers to to do more to bring about a new generation of council housing,” Rodwell said.

Business group London First too has highlighted the mismatch between the £4 billion offer and calculations of London’s affordable housing need, with executive director of place Jonathan Seager saying the financial package as a whole “only scratches the surface of England’s housing crisis”. He adds: “In finalising the settlement with the Mayor, the Government must recognise the overwhelming need for affordable rented accommodation in London.”

Half of the national total will be designated for a variety of affordable home ownership products, with the rest for Affordable Rent and Social Rent. A new form of Shared Ownership will enable people to access it for 10% of its value, which is a reduction from 25%, and to enlarge their share by 1% at a time. The government says there will also be a new Right to Shared Ownership “for the vast majority of rented homes delivered through the programme, providing tenants with a pathway into ownership by giving them the right to purchase a stake in their home.”

Much of the current London funding was for low cost home ownership products – London Shared Ownership and London Living Rent – with the remainder for London Affordable Rent, whose rent levels have been set by the Mayor at the equivalent of what generally cheaper new social Social Rent tenancies would have been had national government not ordered a period of reductions in them in an attempt to lower the housing benefit bill.

London Living Rent, despite its name, provides a stepping stone into Shared Ownership, with providers of the homes expected to help tenants reach a point where they can buy part of the property within ten years.

This article was updated on 9 September 2020 to include the reaction to the funding offer from London Councils. 

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