In November 2016, the Mayor of London released Homes for Londoners: Affordable Homes Programme 2016-21 funding guidance. It outlines how £3bn of government funding will be used to deliver 90,000 affordable homes by 2021.
The guidance includes more detail on the Mayor of London, Sadiq Khan’s, ‘London Living Rent’ policy, a key manifesto pledge, first announced in June 2016.
London Living Rent is now set to become part of the existing suite of low cost homeownership products, as a Rent to Buy product. Rents will be set at a third of gross median household incomes at a borough level and tenants must be offered the opportunity to buy their home on a shared ownership basis after ten years, when the properties have to convert from London Living Rent to Shared Ownership.
Under the Greater London Authority’s (GLA) 2016-21 affordable homes funding programme, for which bids are currently being accepted, London Living Rent will be interchangeable with Shared Ownership up to the point of sale or letting, with developers able to ‘flip’ tenures in response to consumer demand. All providers are expected to deliver a mixture of both tenure types.
In addition, a new ‘London Affordable Rent’ has been introduced, which will be substantially below the 80% of market rent required nationally under the existing ‘Affordable Rent’ (AR) policy. The starting point for London AR will be benchmarks based on formula rent caps for social rents uprated by the Consumer Price Index (currently between £140 and £190 pw).
‘London Shared Ownership’ is also described in the document. Whilst this does not represent a change from the current Shared Ownership model, it introduces greater transparency on service charges and a service charge charter has been promised.
These new products are in line with Sadiq Khan’s stated desire for a ‘genuinely affordable’ housing offer for Londoners and reflect the specific circumstances of the London housing market. They also offer a glimpse of what a truly devolved settlement for housing can bring.
For those authorities outside of London, of which Manchester is still the most advanced in its thinking, this new plan shows how devolved powers can potentially be used to address local housing challenges. It also provides a useful guide to other major cities and regions seeking similar funding powers. And at the very least, it also provides a welcome recognition that the housing challenges faced across the UK are varied, and that policy made in Westminster may not have sufficient flexibility to tackle the housing challenges of Kirklees for example.