£4.9bn needed annually to deliver affordable homes

A new report has revealed that the amount of grant funding required to deliver the affordable homes Londoners desperately need sits at £4.9 billion a year.

The Mayor of London currently receives approximately £700 million affordable housing grant per year from the government, with Sadiq Khan stressing that the government must take urgent action to narrow the gaps between the figures. The analysis, by City Hall, London’s G15 largest housing associations, councils, and housing experts, says the funding necessary to tackle the issue is seven times more than the capital currently receives.

Based on the mayor’s draft London Plan, which identifies need and capacity for 65,000 new homes each year of which 50 per cent should be affordable, the Affordable Homes Programme aims to deliver 325,000 new affordable homes. Of these, 70 per cent would be social rent (22,750 homes a year), 20 per cent shared ownership (6,500 homes), and 10 per cent intermediate rent (3,250 homes).

Khan said: “This analysis shows the vast increase in Government funding required to deliver the affordable homes that Londoners desperately need. City Hall is building record numbers of new council and social homes, but we need far more funding if we are to truly tackle the housing crisis. As a new Prime Minister takes the helm, they must put their money where their mouth is and provide the funding we need to turn this crisis around.”

Paul Hackett, chair of the G15 group of London's largest housing associations, said: "Londoners have known for years how severe the capital’s housing crisis has become, but our new joint report with the Mayor shows exactly what is needed to address the problem. Housing associations have shown great flexibility in recent years, responding to lower grant rates since 2011 by building more housing for sale to fund a pipeline of affordable homes.  But London’s large associations now fund up to 85 per cent of the cost of new homes from their own resources.  With the private market slowing, this cross-subsidy model is at breaking point.

“This research shows that to build genuinely affordable homes at the scale required, the government’s approach to funding needs to fundamentally change.  We need to return to higher grant rates and agree a long-term settlement to give us the tools to keep tackling the housing crisis head-on.”