Wednesday, November 25, 2020
Finance

In an effort to fund low cost rent, mayor raises grant rates to £60,000

In a big change to affordable housing funding, the mayor of London will fund social-rent level homes in London with fixed grant rates of £60,000 per unit.

The mayor released the first details of his £3.15bn grant programme. The cash will be used to fund 58,500 shared ownership and London Living Rent homes and 29,000 units at new ‘London Affordable Rents’. London Affordable Rents will be set according to target rent benchmarks, the mechanism previously employed to set social rents, adjusted for inflation plus one per cent rise. The benchmarks will start at £144 per week for a one bedroom home. The amount will rise to £188 for a six bed property, as per the funding guidelines.

Those building the homes will receive set grant rates of £60,000 per unit, a figure thrice the levels available under government programmes since 2011. However, bidders will need to build 50 per cent affordable housing during the grant period to March 2021.

It is expected that large housing associations will form strategic relationships with Greater London Authority (GLA) if they commit to 60 per cent affordable housing. Though the exact mechanism is yet to be developed, it is understood that a formal sharing of risk with the GLA will be implemented.

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

City Hall has not split London Living Rent and shared ownership homes till now. It intends to give bidders the flexibility to vary between the two according to market conditions. Grant rates for both of these products will be set at £28,000 per unit. The GLA is providing set grant rates in response to a clear and consistent request from the sector to ensure certainty.

The rents will amount to a third of average household income in the borough it is located in, which comes to an average of £977 per month across London. The homes will be available to households currently renting on incomes of up to £60,000.

Conservatives in City Hall attacked the mayor for “watering down” pre-election promises to build 80,000 homes per year with 50% affordable.

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