Sadiq Khan will allow private housebuilders to limit the amount of affordable housing included in new developments to 35% in a deal that opponents said casts doubt on his election promise to “set a target for 50% of all new homes in London to be genuinely affordable”.
The threshold, announced on Tuesday by the London mayor in a new housing strategy, is intended to increase housebuilders’ contribution to cheaper housing, but the Conservative opposition accused Khan on Monday night of “ratting on what he said during the election”, something strongly denied by City Hall.
Andrew Boff, the Tory housing spokesman on the London assembly, said: “There was a clear statement that 50% was what he wanted. Now this has become a long-term aspiration. The mayor has resiled on his housing target.”
Khan said he now planned to “move towards a long-term strategic goal” of half of new homes being genuinely affordable and stressed that “fixing the housing crisis will be a marathon not a sprint”. City Hall believes the demand for 35% from private builders is an important first step towards delivering 50% by the end of this decade.
Khan also said he would grant £3.15bn allocated to City Hall by the chancellor in last week’s autumn statement to housing associations who build a minimum of 50% affordable homes “with some partners enabled to deliver at least 60%”.
It is estimated this will provide funding for at least 90,000 affordable homes over the next six-year period, an increase of nearly 50% on the previous six years. They will be a mix of low-cost rent, shared ownership and “London living rent” which is based on a third of average incomes in each borough.
The announcement of the new target as part of supplementary planning guidance comes amid a deepening crisis in the availability of cheap housing in the capital. Just 13% of the new homes approved in London in 2014-15 were classed as affordable, which includes rents as high as 80% of market rates. That is down from almost a third in 2007-08. Khan and his deputy mayor for housing, James Murray, have been in talks with developers since May about ways of speeding up the delivery of housing of all kinds.
“London is in the midst of a housing crisis, with thousands of Londoners priced out of a city they call home,” said Khan. “These announcements today demonstrate real progress on the long road towards fixing London’s housing crisis.”
Khan wants to speed up the planning process by exempting developers from revealing the profitability of their schemes to officials if they promise to build at least 35% affordable housing. It is understood that some developers wanted the figure to be set at 30%. Currently, City Hall can insist on seeing the financial model behind a housing scheme to ensure the developer is not making surplus profits when they could be providing more affordable units.
In most major applications, developers have to provide a “viability assessment” that shows the costs and revenues of a development, and therefore how much affordable housing can be provided while maintaining a profit. It often leads to disputes between housebuilders and planners.
City Hall said the new approach would “offer developers a new quicker route through the planning process, removing the requirement for protracted viability negotiations if they meet the minimum 35% affordable housing”.
Boff also questioned whether Khan would be able to deliver 35% affordable housing from private developers, who he predicted would argue that they could only go ahead with projects if they are allowed to deliver less and would therefore turn down the 35% fast-track approach in favour of negotiation.
