Increase in grant rate for affordable homes in London

The Mayor released the first details of his £3.15bn grant programme, following months of negotiation with central government.

Mr Khan will use the cash to fund 58,500 shared ownership and London Living Rent homes, and 29,000 at new ‘London Affordable Rents’.

London Affordable Rents will be set according to target rent benchmarks (below), the mechanism previously used to set social rents, adjusted for an inflation plus 1% rise.

These benchmarks will start at £144 per week for a one-bedroom home, and rise to £188 for a six-bed property, according to the funding guidelines published today.

Providers bidding to build these homes will receive set grant rates of £60,000 per unit – around three times higher than levels previously available under government programmes since cuts in 2011.

However, in order to bid for grant at these levels, providers will need to commit to building 50% affordable housing across their portfolio during the grant period to March 2021.

A select group of providers – expected to be large housing associations – will enter ‘strategic relationships’ with the Greater London Authority (GLA) if they commit to a programme of 60% affordable.

The exact mechanism for these will be developed, but it is understood they will involve a formal sharing of risk with the GLA.

City Hall will allow local authorities to set ‘London Affordable Rents’ at higher than the benchmark levels if they can demonstrate it is still ‘genuinely affordable’ in their area. The grant rate would then be lowered accordingly.

Mr Khan said: “These announcements today demonstrate real progress on the long road towards fixing London’s housing crisis.”

Writing for Inside Housing today, David Montague, chief executive of L&Q and chair of the G15, described the announcement as a “defining moment in housing history”.