Large London landlords make last-ditch plea for ‘ambitious’ Affordable Homes Programme ahead of Spending Review

On Wednesday, Rachel Reeves will unveil her long-awaited Spending Review. It will lay out spending plans for each government department over the next three years.

However, media reports suggested that housing secretary Angela Rayner only reached a deal with Ms Reeves last night over spending plans for her department. Rumours suggested there had been a deadlock over funding for housing and councils.

The letter to Mr Pennycook, dated 5 June, said that rent convergence is a “often overlooked but vital intervention” to help tackle the housing crisis.

The policy was introduced by the previous Labour administration in 2002, but scrapped by the coalition government in 2015.

The mechanism allows housing associations to gradually raise rents that are below the earnings-linked formula, so people pay a similar rent for similar properties.

The G15 has said that its members have lost £2bn in rental income since the policy was abandoned.

The letter said: “The reintroduction of rent convergence would not only support direct housing delivery but also help inject billions of pounds’ worth of fresh activity into local economies, reduce strain on local public finances, and improve prospects for those moving into new homes.”

It added: “Discrepancies in rent levels are hitting the capital especially hard.”

Recent research by the G15 showed that 29% of homes covered by the current rent standard are below where they should be in the context of the local market.

The letter, also copied to Darren Jones, chief secretary to the Treasury, said that years of rent cuts meant that housing associations are “struggling to fund required improvements to current housing portfolios, let alone deliver new homes”.

Many large landlords in the capital have slashed their housebuilding targets as they grapple with other financial priorities. 

The chief executive of giant commercial property landlord Landsec and senior figures at property groups Ballymore, Hadley, Hill and Fairview New Homes also signed the letter, which had 12 signatories in total. 

The organisations are all members of lobbying group BusinessLDN, formerly known as London First.

Last October, the government launched a consultation for proposals on a new five-year rent settlement and announced a £500m top-up for the AHP. 

An extra £2bn was added to the AHP in March’s Budget. However, it was described at the time by ministers as a “down payment” ahead of a “more long-term investment in social and affordable housing”.

The Ministry of Housing, Communities and Local Government has been contacted for comment.

This latest call comes after the new chair of the G15 group of London’s largest landlords also called for a return to rent convergence, and for the government to revisit Housing Revenue Account settlements.

Ian McDermott, chief executive of Peabody, made the remarks in a joint comment piece for Inside Housing, alongside Grace Williams, executive member for housing and regeneration at London Councils.