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City Hall announces grant programme for council housebuilding in London
Councils in London will receive housing grant to build 10,000 new homes over the next four years, under a new City Hall grant scheme.
In what is being badged as the first ever City Hall programme dedicated solely to council housing, the authority will dedicate funds from the £1.67bn of grant received at the Autumn Statement to council housebuilding projects.
Councils in London built just 2,100 homes over the past seven years, including 300 that were completed last year, less than 2% of London’s homes.
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Under the new programme councils will be permitted to bid for grant at an increased rate of £100,000 per home for social rent or London Affordable Rent, well above the rate of £60,000 in the mayor’s affordable homes programme.
Grants will be £28,000 or £38,000 per home for London Living Rent or shared ownership, depending on whether the home is started before or after 2020.
The higher rate of £38,000 is intended to incentivise councils to build homes sooner.
In the funding prospectus for the new programme, City Hall said it expects every London council to submit a single bid and that as well as allocating grant funding for affordable housing, it will work on improving capacity for housebuilding within local authorities.
In what is being branded the ‘Building Council Homes for Londoners’ scheme, Waltham Forest plans to start 525 new council homes with £26m of funding from City Hall over the next four years, while both Newham and Lewisham have each committed to starting 1,000 new council homes by 2022.
The new homes will be built to London Affordable Rent benchmarks, which range from £150 a week for a one bedroom home through to £194 a week for a home of six bedrooms or larger.
These rates are well below market values, or ‘affordable rents’ in most of London, but tend to be above average levels for existing social rent properties.
The programme also has a plan to reform the way Right to Buy works in London.
If councils are unable to spend all their Right to Buy receipts, which is often the case due to government restrictions on how the funds can be used, they can provide them to the GLA, which will ring-fence them for use by that council.
Sadiq Khan, mayor of London, said: “Back in the 1970s, when I was growing up, London councils built thousands of social homes, providing homes for families and generations of Londoners.
“But the government has turned its back on local authorities, severely hampering their ambition to build by cutting funding and imposing arbitrary restrictions on borrowing.
“I am proud to launch Building Council Homes for Londoners – the first ever City Hall programme dedicated to new council housing. I want to help councils get back to building homes for Londoners again.”
Clare Coghill, leader of Waltham Forest Council, said “This money will give a massive boost to the number of council homes we can build, helping to reduce the thousands of people on our housing waiting list and achieve our priority of putting a decent roof over our residents’ heads.”
Councils will submit funding bids through the City Hall website before the deadline of 30 September, with allocations set to be announced before the end of the year.
Earlier this week City Hall announced the first purchase under its land fund as it steps up its efforts to combat London’s housing crisis.
At a glance: the different types of rent in London
Picture: Getty
Social rent: The amount of social rent a person pays depends on the location and size of the property, and is set according to a complex formula, but it is typically set at between 50% and 60% of market rent.
Affordable rent: Introduced by the coalition government in 2011, ‘affordable’ rent can be up to 80% of market rent, although many associations have been charging lower than this.
London Affordable Rent: A tenure introduced by Sadiq Khan that is lower than national affordable rent and based on target rent levels towards which social rents are gradually being raised. This makes it higher than average social rents in the capital, but in line with the rent that would likely be charged if a new social rent unit was built and set according to the same formula.
London Living Rent: A rental product aimed at middle-income Londoners introduced by Sadiq Khan, with rents set at one-third of average local earnings.
Target rent: A social rent level calculated by the government, which council and housing associations should use to move their social rents to over time.
