City Hall is in a race against time to meet government-set targets for new affordable homes by the end of this month, Sadiq Khan confirmed at yesterday’s Mayor’s Question Time session at City Hall.
Khan was awarded £3.15 billion in government funding in 2016 and a further £1.67 in 2018 to start 116,000 affordable homes by March 2022. That deadline was later extended by 12 months following the construction slowdown caused by the Covid-19 pandemic, but has remained a huge challenge, the Mayor told London Assembly members (AMs).
The Assembly housing committee’s annual monitoring report shows some 91,000 homes had been started between 2016 and the end of March last year, leaving Khan looking for a record 25,000-home performance in this financial year, soon to end, to reach his target. “We have met all our targets so far, and will endeavour to do so again,” he told AMs. “We are definitely throwing everything at it.”
Factors holding back progress have included the continuing economic impact of the pandemic and Brexit, the Ukraine situation, new post-Grenfell building safety requirements, high interest rates and inflation, soaring construction costs – up 42 per cent since January 2020 – and labour and materials shortages, he said. “The 2016-23 figures were set over seven years ago, and the funding remains the same despite the significant impact these factors have had.”
In fact, performance in 2022/23 up to December was well up on the equivalent figure for 2021/22, the year Khan went on to achieve the highest number of “starts” – 18,722 – when City Hall took over affordable housing spending from central government in 2003, according to latest reports published last week.
The new figures show that 3,698 homes funded through the Mayor’s 2016-2023 programme were started from September to December 2022, giving a total for April to December 2022 of 6,877. There has been a continuing shift towards supplying council and other social rent homes, which now make up more than two-thirds of the new homes being built. “We’ve smashed the target I set myself in 2016 to fund the delivery of 10,000 new council homes in London,” Khan said.
Conservative AM Tony Devenish said funding could be at risk of being clawed back by the Treasury if delivery fell short, but Khan said this had not been suggested at what he called a “positive” meeting with levelling up secretary Michael Gove earlier this year. “He understands the current challenges impacting housing delivery,” the Mayor told AMs. “We can’t say at this stage where will get to by the end of the financial year, but nothing he’s said leads me to believe there would have to be money returned.”
The Mayor was less generous to the government when answering questions about private renters in London and the continuing freeze on Local Housing Allowance (LHA) rates, used to determine entitlement to housing benefit, which is leaving benefit levels falling further behind rents levels.
“The government’s decision will make it even more difficult for lower income Londoners to access safe, decent and stable housing,” he said. “LHA rates are out of touch with the current rental market. Rents in London have risen by 16 per cent in the last year. Forty per cent of tenants say they will struggle to pay their rent in the next six months, and I am worried about the consequences for homelessness.”
The Mayor echoed the concerns of the cross-party London Councils group, which had called on Chancellor Jeremy Hunt to use last week’s budget to increase LHA rates. Recent research for the group suggests that less than five per cent of private rented properties in London are now affordable to those relying on LHA to meet their housing costs, down from 18.7 per cent in 2020/21.
“The government missed an opportunity in the budget to end the freeze, which is putting extra pressure on lower income Londoners,” Khan said, repeating his previous calls for the powers to instigate a two-year rent freeze and control private rents in the city longer-term.
Yesterday’s Mayor’s Question Time can be viewed in full here.
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