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by GK Strategy 8th August, 2017

London and affordable housing – what next?

After the GLA’s figures showed a failure to reach affordable housing targets set out by Boris Johnson, we look at what’s next for affordable housing in London ahead of Mayor Sadiq Khan’s London Plan to be published later this year.

According to the Mayor of London’s annual monitoring report, the provision of affordable housing in London in 2015/16 failed to reach the targets set out in the previous London Plan and actually decreased from the previous year. The report, released last month, clearly shows a discrepancy between the amount of affordable units committed to and the number which were delivered. Whilst the targets were more ambitious than previously, with the net affordable homes target increasing from 13,200 to 17,000, provision fell significantly short of this target, with only 6,675 affordable homes delivered – a 14% drop from 2014/15. These statistics mean that the share of affordable housing in London actually fell from 26% to 20% of net housing supply, highlighting the need for flexible policy to support developers to deliver more affordable housing moving forward. Overall the completion of new homes was more of a success story, at 38,500, though this did also fail to reach the target of 42,000 units.

Though Khan’s spokesperson placed the blame on the previous Mayor for “outrageously low and falling levels of affordable housing” in the pipeline he inherited, there is no doubt that the figures place greater pressure on him to tackle London’s housing crisis – as promised in his manifesto. These figures will draw further attention to the Mayor in the build-up to the London Plan, with a consultation over the initial draft expected in autumn 2017.

Ahead of this, the Mayor has shown a willingness to take firm action, with the recent allocation of £1.7bn to councils and housing associations to allow them to deliver up to 50,000 affordable homes from 2017 to 2021, is widely praised. The pledge accounts for just over half of his total affordable housing fund of £3.15bn allocated by central government at the 2016 Autumn Statement, and 55% of the affordable homes he wants to fund in his term as Mayor. Around 17,500 will be for rents around social levels, and just under 32,000 will be for a combination of the Mayor’s new London Living Rent and Shared Ownership.

The allocations include eight strategic partnerships with major housing associations including Genesis, L&Q, Notting Hill and Peabody which are designed to deliver 38,500 affordable homes with at least 60% affordable housing across development projects which are significant in scale. Paul Hackett, who Chairs the G15 Group of London’s largest housing associations, has thrown his weight behind these partnerships, stating that they reflect an “unprecedented level of ambition to build the homes the capital needs”.

Significant questions still remain, however, not least regarding where the land will be found for the new homes that have been committed to. With councils under increasing pressure to deliver new affordable homes whilst protecting commercial space and curtailing the hollowing out of industrial land in London, difficult decisions will have to be made. Deputy Mayor for Housing James Murray has acknowledged that the targets the GLA will pursue will be “stretching” and has stated that success will rely on flexibility, particularly with regards to larger projects. This puts the onus both on developers and policymakers at local councils to work together to develop and support innovative proposals, particularly with regards to mixed-use developments and the release of public land.

There are some encouraging signs, with Khan’s new Homes for Londoner’s board bringing together London boroughs, TfL, housing associations and developers and looking to have real teeth in driving forward housing delivery. Such collaboration highlights a genuine appetite to tackle the ongoing housing crisis, however, the recent reduction of affordable housing at the Battersea Power Station development offers a stark reminder of the need to ensure that the delivery of affordable housing makes commercial sense for developers throughout the lifetime of construction projects. Ultimately the Mayor will know that he will be judged harshly should he again be reporting on a failure to reach affordable housing targets this time next year. For the Mayor, developers, housing associations and local councils, the hard work starts now.

GK’s Intelligent Planning team are currently working on affordable housing policy and supporting clients to engage in the development of the London Plan. For more information please contact GK’s Planning Lead, Matt Palutikof via matt@gkstrategy.com.

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