The Mayor of London, Sadiq Khan, has pledged £200m to protect affordable housebuilding in the capital throughout the continued Brexit uncertainty.
The continuing Brexit negotiations are already affecting the housing market, with falling sales and uncertainty over house prices. This is having a knock-on effect on housing associations, which currently receive low levels of funding from the Government and, therefore, rely heavily on income from selling new market-price homes to help subsidise new affordable housebuilding.
Faced with a slowdown of new home sales, the Mayor will help housing associations, by offering extra funding to switch homes from market sale or shared ownership, to homes for rent at social or intermediate rent levels, which are lower than market rents. This extra funding will enable them to commit to their future plans, sign construction contracts and begin development without further delay.
Khan believes that the impact of Brexit uncertainty makes this extra funding essential, though he has warned that it will stretch City Hall’s affordable homes funding to its limit. The Mayor will explore all options for further funding, and is calling on the Government, at the very least, to match this funding, by providing extra investment for housing associations to deliver their planned schemes.
Khan says: “At City Hall, we are building record numbers of new social rented and other genuinely affordable homes. We must not let the Government’s chaotic mishandling of Brexit undermine our plans. That’s why it is right we push our funding to its very limits, to keep housing associations building more affordable housing through the ongoing uncertainty – and it’s even more important given the Government totally failed to address my concerns when I recently raised them. Whatever happens with Brexit, ministers must at the very least match my support, and ensure we can keep building the homes Londoners need over the coming years.”
The support received by individual housing associations will depend on the schemes and their pipeline, as well as those underway. Given the strains already on the Mayor’s affordable housebuilding budget, and the importance of targeting it effectively, this funding is only available for homes starting in this calendar year.
The Mayor’s investment comes after he wrote to the Secretary of State last month, along with Paul Hackett, the Chair of the G15 largest housing associations in London, and Councillor Darren Rodwell, the Executive Member for Housing and Planning at London Councils, outlining the immediate emergency support that would be required from the Government if the UK leaves the EU without a deal.
Helen Evans, the Chief Executive Officer of Network Homes and Vice-Chair of G15, comments: “The current market uncertainty limits our ability to generate cross-subsidy to reinvest in affordable homes, so this strong, positive action to address that is welcome. If enough additional funding is made available, we will be able to continue to commit to new developments and increase the levels of affordable homes we are building. We look forward to engaging with the GLA [Greater London Authority] to secure this.”