Mayor launches £100m fund as part of new housing deal with Londoners
The Mayor of London, Boris Johnson, today launched a £100m fund as part of a new housing deal to help thousands of working Londoners, giving a huge boost to the construction industry and ensuring that London retains its competitiveness.
To help the capital maintain its economic vitality and to meet Londoners’ housing aspirations, the Mayor wants to assist the thousands of households on a range of modest incomes for whom the current housing market offers limited choice. Under the Mayor’s 'Housing Covenant’, the first part of which is being set out today, those who contribute to the success of the capital should expect a reasonable housing offer in return.
Bids are being invited for organisations to deliver proposals for a range of housing projects across London - including helping people to own a share in a new home - which could help to house 10,000 people who want to live in the city that they work in.
In line with the Mayor’s commitment to drive jobs and growth, the £100m investment he is making through his successful ‘First Steps’ programme has the potential to boost the London economy by £2 billion, spurred by around £1 billion worth of construction.
Using his new powers, which include responsibility for budgets and public land, the Mayor of London’s plans will:
Assist Londoners by removing red tape, including planning restrictions, to provide greater choice and flexibility and boost the mid-market offer in the capital. The aim is to make the ‘intermediate’ market, which offers a range of low-cost home ownership products, give people the same freedoms and flexibility as those buying on the open market enjoy.
Enable people to find the home they want and then choose from a flexible range of options including shared-ownership, equity loans and a new option - ‘Rent to Save’ - which will help households save for a deposit while benefitting from low rents. This will be alongside new funding for the already popular ‘FirstBuy’ scheme. At present Londoners are hampered by a system that offers only a single take it or leave it financial offer tied to a particular home.
Make it easier to move the equity built up in one ‘intermediate’ home into another, remove constraints on re-sales of these properties, reduce restrictions on which Londoners are eligible for assistance and remove duplications and bureaucracy in the way these homes are marketed.
The Mayor of London, Boris Johnson, said: "London’s success is built by its workforce and if we are to maintain our vitality as a city we have to provide Londoners with a fairer housing deal. For an increasing number of Londoners the capital’s current housing market is just not working and failure to deal with the issue could lead to a damaging exodus that will hamper our competitiveness. "So, in the long tradition of the great house building programmes of the past and of London's great philanthropists such as George Peabody, I want to make a new housing covenant with Londoners, one that recognises that those who contribute to our success should benefit from it too.
"To improve the housing choices of those who work to make this city the fantastic place that it is, I am opening up the market, cutting red-tape and injecting £100m worth of investment to stimulate supply. The programme we are announcing will not just unlock the door to home ownership for thousands more Londoners, it will give a welcome shot in the arm for jobs in the capital’s construction industry and spur wider economic growth too."
The Mayor has vowed that all reusable investment from this funding boost will be reinvested for further affordable homes delivery over the next decade. The initiative builds on the successful delivery of homes in the capital over the past four years, which saw a record 54,000 affordable homes completions, despite tough economic conditions.
The homes provided will be in a range of locations, offering affordable and sustainable home ownership to working London households on a range of incomes up to a maximum joint income of £64,300 per annum but with flexibility up to £77,200 per annum for families with dependents purchasing properties with three or more bedrooms. The first homes are expected to be available for sale in Spring 2013 with completions ranging up until March 2016.
The Mayor is seeking proposals from any providers that can develop intermediate housing in London. In particular, organisations not currently working with the GLA or who have not received GLA funding in the past are encouraged to bid. Organisations could include London Boroughs, housing associations, developers and house-builders, for profit and not-for-profit bodies such as charities.
All bids must be returned to the GLA by noon on 30 November 2012.
Notes to editors
1. The full prospectus for the Mayor’s Housing deal can be accessed here: www.london.gov.uk/priorities/housing/affordable-housing
2. Bids are invited for up to £100m of funding to deliver one of or a combination of the following options:
A flexible affordable home ownership product - This will assist aspiring home-owners through rent to save, shared ownership or equity loan depending on the financial circumstances of the purchaser.
Additional funding for the existing FirstBuy product.
Other affordable home ownership options which have a track record of success with customers and retail mortgage lenders.
3. GLA modelling suggests that if the full amount of funding was taken up approximately 10,000 Londoners could be housed in homes funded through this initial boost. Recycling the grant will mean more households can be helped in future years. The vast majority of homes delivered will be additional to the previously announced target of 55,000 affordable homes in the 2011-15 period. 4. The Mayor has sought to broaden the housing offer in London, and assist working Londoners who are not priority for affordable rented housing and are finding housing costs increasingly expensive. In April 2011, he launched his First Steps programme to assist low and middle income households get a foot on the housing ladder. First Steps is the umbrella term for all intermediate housing in London, including shared ownership, equity loan and intermediate rental homes. 5. The Mayor is keen to increase choice and mobility within the intermediate housing sector, and to offer as similar a range of options as possible to those that are available for the open market. The Mayor has therefore announced a series of policy changes to deregulate the intermediate housing market and to reduce red tape. He will:
Separate the financial product from the property to enable customers to ensure that they find the most appropriate financial package to support themselves into home ownership, without having this dictated by the particular home they purchase;
Develop the secondary market to enable those who are already in intermediate housing to move within the sector to better meet their housing needs reduce the number of homes that leak out of the sector ;
Ensure that when intermediate properties become available, there are not restrictive planning conditions or other encumbrances that unreasonably prevent potential beneficiaries from accessing these opportunities; and
Build on the success of the First Steps Agents service by removing unnecessary duplication for both customers and providers, and providing an enhanced, private sector funded, web-enabled service.
4. The funding for this covenant is being made available through a combination of re-profiling of other GLA budgets and new resources made available by DCLG following the housing stimulus announcement on 6 September 2012.