Affordable Housing Funding

Questions to the Mayor of London – answered on 29th July 2019.

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Photo of Tom Copley Tom Copley Labour

Now the GLA has identified that you need seven times as much annual funding to build the affordable homes we need, and there is in particular a £280,000 “surplus gap” that needs to be plugged for each social rent home, will you impress upon the new Prime Minister the urgent need for this funding, without caveats that it must be used for affordable home ownership?

Photo of Sadiq Khan Sadiq Khan Mayor of London

Since being elected I have made the case to every Prime Minister of the day that London needs a step‑change of investment in genuinely affordable housing and particularly in council homes and homes for social rent. Without prejudicing the outcome of the current contest, if Boris Johnson does become the next Prime Minister I will also remind him of his support just last year for the fiscal devolution required, in his words, “To build the homes our children and grandchildren are going to need”.

I am using all the powers and resources we currently have to get more council, social rented and other genuinely affordable homes built. My record shows we are making a difference. Last year we started more genuinely affordable homes and more social rented homes than in any year since City Hall took control of affordable housing investment. Through the first ever City Hall programme dedicated to council home building we have also helped get more new council homes underway than in any year since 1985 but we desperately need more investment and powers from the Government.

Only this month I published a report assessing the amount of Government funding required to deliver 32,500 new affordable homes a year between 2022 and 2032. This is the number set out in the draft London Plan and the report assumes 70% would be for social rent. The report, which was developed with the G15 housing associations, councils and housing experts, calculated a funding gap or around £284,000 for every social rented home. While some of this gap can be covered by contributions from developers and other resources, there is still a gap of £4.9 billion a year that needs to be covered by Government funding. This is around seven times what we currently receive. Whoever leads the next Government must not only provide the right level of funding but do so without strings being attached to prevent us using it to deliver the social rented homes that Londoners so desperately need.

Photo of Tom Copley Tom Copley Labour

Thank you very much for that answer, Mr Mayor. You have pre‑empted a couple of my supplementary questions. I think fiscal devolution is very, very important. I hope that ‑ I cannot believe I am about to say this ‑ [potential] Prime Minister Johnson will follow through on his commitments to fiscal devolution. Also, I agree with you that strings should not be attached. The need in London is for social housing and therefore the bulk of the funding should go to social housing.

Your report commissioned by the GLA with the housing associations found that 30% of the cost of delivering the affordable homes that we need over ten years would be for land and it would cost £33 billion. What could be done to reduce that land cost?

Photo of Sadiq Khan Sadiq Khan Mayor of London

This is an important point, the cost of land in London. There are a few things that could be done quite easily: how land is valued. In my view it should be valued on the existing use rather than a speculative use. That is really important. The powers of land assembly are important. We have a good examples in London like the former Holloway Prison site, where Islington Council did a planning brief for the former Holloway Prison site and said, should a developer want to purchase the land, when it comes to applying for permission, its expectation was that 50% of the homes would be genuinely affordable. Lo and behold, the value of the land stayed at a sensible level and it has been bought by a developer. They have partnered with Peabody and we are helping them through our land fund. 60% of the homes there are going to be genuinely affordable and there will be a women’s centre there as well.

It shows a difference a good council can make. Imagine if the Government was on the side of working with councils to reduce the value of land in London, being at levels that would make affordable homes unviable in many parts of London.

Photo of Tom Copley Tom Copley Labour

By way of contrast, of course, another example from a little while ago, in Islington, the Camden borders, the Mount Pleasant site, of course, was approved with just 25% of affordable housing, after which Royal Mail then went on to sell the site at a huge profit. That stands as a stark contrast.

Finally, when you took office I believe the percentage of affordable homes that were being approved across London was just 13% and it has now gone up to 36%. Do you think, therefore, that getting rid of the affordable housing requirements and targets that you have imposed would be a big mistake?

Photo of Sadiq Khan Sadiq Khan Mayor of London

Anybody who wants to reduce the expectations I have from developers to have 50% affordable housing to a lower figure must accept that will lead to less affordable homes being built in London. Independent experts have said one of the reasons why we have gone from 13% of homes being given permission that are affordable - using a dodgy definition has gone from 30% dodgy to 36% genuinely affordable - is because of the planning rules put in place since I became Mayor in 2016. I am hoping that one of those standing against me to be the Mayor has that sort of barmy policy because it will mean that I will win in May next year [2019].

Photo of Tom Copley Tom Copley Labour

Thank you, Mr Mayor.