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London mayor raises grant rates for housing associations

Sadiq Khan is offering increased grant rates for housing associations willing to boost their delivery of affordable homes, Inside Housing can reveal. 

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Sadiq Khan, mayor of London
Sadiq Khan, mayor of London
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Sadiq Khan offers increased grant rates to associations that build more affordable homes #ukhousing

London mayor offers £70,000 per additional social home start #ukhousing

The London mayor is putting some of the additional £1.67bn secured in the Spring Statement this year into offering £70,000 per social home for any additional starts by housing associations, up from the existing level of £60,000.

Associations, City Hall said to Inside Housing, have told the mayor that they are reaching the limits of what is possible by cross-subsidising affordable housing through market activity, and the increased grant rate is an attempt to deal with this.

Housing associations in London already have a certain number of homes allocated to them under the mayor’s grant programme, and this increased grant rate will be available for any homes associations start over and above those initial allocations.


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If an association does not increase the overall number of homes on a site, but does improve the proportion of those homes that are affordable, it can access the improved grant rate for any of the additional affordable homes.

The increased grant regime applies to any starts that occur through to March 2022. As there are currently no allocations for 2021/22, all starts in that financial year will count as additional and benefit from the increased rate.

Although City Hall is also offering an increased grant rate for London Living Rent and shared ownership, James Murray, deputy mayor for housing, told Inside Housing he expected the majority of the funding to be spent on social housing.

The mayor’s new council housebuilding programme, which is offering local authorities a grant rate of up to £100,000 per social home, is funded from the same £1.67bn pot, and City Hall has no preference as to how this is split.

Mr Murray told Inside Housing: “We’re leaving it open at this stage to see what bids come in. I’ve been meeting with council leaders in the last few weeks since the prospectus came out, since the elections, and council leaders are really keen to get on and build more council housing, which is very positive.

“We’ll be speaking to the G15, to medium-sized and to small housing associations about how they can spend this money, and I’ve been very encouraged by what some of them have informally said to us so far.”

City Hall is encouraging housing associations to bid for the increased rates by 30 September 2018.

Paul Hackett, chair of the G15 group of London’s largest housing associations said:

“Higher grant levels are critical in enabling housing associations to build more of the affordable homes that Londoners need, so this £10k boost is welcome.

“In the longer term it’s clear that grant rates need to continue to grow if we want to really unlock London’s affordable housing potential. g15 members will be working with the Mayor’s team to help make the case for further investment in London’s affordable housing needs.”

Update: at 9.26am on 19.6.18 This story was updated to include a quote from Paul Hackett.

At a glance: the different types of rent in London

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.

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