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Newham’s housing company to miss 50% affordable target
Newham Council has admitted that its housing company will not meet the 50% affordable target set by mayor Rokhsana Fiaz in its next round of development.
A report that went before the east London borough’s cabinet last week said that of the 294 homes delivered through Red Door Ventures’ (RDV) second tranche of its development pipeline, only 38% will be affordable.
It said the cost of delivering a new community hub at one of the six schemes “limits the ability” of RDV to deliver a higher level of affordable housing.
The cabinet approved a £113.1m funding package to support the developments.
But after succeeding Sir Robin last May, Ms Fiaz took steps to turn it into an affordable housing vehicle as part of her pledge to build 1,000 new council-owned social rent homes by 2022.
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Of the 294 homes now scheduled for development, 182 will be for market rent, eight will be for shared ownership and 104 will be for London Affordable Rent – London mayor Sadiq Khan’s social rent equivalent product, which is around half market rents.
RDV’s target, set in October 2018, is for 50% of homes it delivers to be at London Affordable Rent.
The report said RDV “remains committed to delivering an average of 50% across their overall programme, in line with the mayor’s manifesto commitment”.
Greater London Authority grant of £10.7m will help pay for the 112 affordable homes, with Newham Council having been awarded £107m in total.
RDV is “currently exploring the necessary steps” to set up a subsidiary registered provider of social housing, according to the report, in order for it to retain the affordable homes and still comply with grant rules.
The report also notes that the “unexpected recent increase” in Public Works Loan Board rates “has an adverse impact on the profitability of the project for the council”, but long-term annuity rates were still lower than modelled in the council’s viability assessment for the project, meaning it is “still affordable”.
And it reveals that RDV intends to renegotiate Section 106 agreements on two schemes requiring the company to deliver 21 affordable homes off-site which were reached before its development programme was altered to include more affordable housing.
At the same meeting, the cabinet was given an update on the regeneration of the Carpenters Estate – which has long been earmarked for demolition and sits largely empty. Ms Fiaz scrapped the previous mayor’s plans for a joint venture with the private sector to rebuild the estate.
A report said that following several months of resident consultations, “restoration options will continue to be developed to deliver a financially viable vision for the Carpenters Estate which builds new homes and identifies the optimum route to deliver the largest proportion of socially rented council homes possible, aiming for a minimum of 50%”.
Ms Fiaz said it was “erroneous” to suggest RDV will miss its affordable housing target, as the 294 homes are part of a wider delivery programme and insisted the 50% threshold will be hit “on average across the RDV programme”.
She added: “Rather, with other measures, it’s the principle mechanisms through which we’ll deliver my pledge to build 1,000 genuinely affordable homes in the borough by 2022.
“We have stepped up pace as a council to fix a broken system that is failing to deliver the genuinely affordable homes our people in Newham need.
“In light of last night’s general election result, our commitment to driving forward municipal house building remains resolute. Doing nothing in the face of an acute housing crisis is not an option as the people of Newham need hope that we’ll deliver for them, and we will.”
Update: at 16.45pm 13/12/19 a comment from Ms Fiaz was added to the story.
