Mayor delivers £220 million funding boost for low cost homes to buy
The Mayor of London, Boris Johnson, today announced his intention for millions of pounds of funding for two new schemes to help Londoners into affordable home ownership and accelerate the delivery of new homes.
Shared ownership helps people on low to medium incomes own a home, requiring much lower deposits, and will be given a further funding boost of up to £180 million with The Mayor’s First Steps Challenge Fund. The Fund aims to accelerate the delivery of 4,000 new homes between 2015 and 2020 and is being made available on a recoverable basis so that money can be reinvested to provide more opportunities for affordable home seekers, helping achieve the Mayor’s aim of assisting 250,000 Londoners into low cost housing by 2025.
The Mayor is also giving up to £40 million of loan finance to Gentoo’s Genie for a new innovative housing product where buyers will need no deposit or mortgage to purchase their home and at the end of the agreement customers own 100 per cent of the home outright. The scheme aims to deliver 2,000 new homes over the next 10 years, helping people who would struggle to save a large deposit for a mortgage.
The Mayor has already made considerable efforts to help Londoners to own their own home with over 50,000 people expected to be helped into home ownership through his First Steps scheme over the course of his two Mayoral terms. He has also moved to remove red tape and bureaucracy in the application and purchase process, providing greater choice and flexibility for purchasers. Alongside steps to improve the mobility options available to existing purchasers of First Steps homes who need to move for family or employment reasons.
The Mayor made the announcements today as he visited Erith Park in Bexley, a major new regeneration project, with 80 per cent affordable rent and shared ownership homes. The Mayor joined two families who will be moving into shared ownership homes for their first visit to their new homes. He also met one of the residents of the former estate who moved into her new home in December.
The transformation of Erith Park is being delivered by Orbit Group, in partnership with Wates Living Space, London Borough of Bexley and the local community. The Mayor has awarded the project £23 million from his affordable housing funding. The site was formerly known as the Larner Road estate, which originally had a large number of single occupancy flats and suffered from high crime levels, making it undesirable for many local families.
The first part of the major regeneration project will deliver 343 new homes, including three & four bedroomed family homes with gardens, with a three-bedroom shared ownership house costing approximately £240,000. Erith Park will provide a mix of homes for affordable rent, shared ownership and outright sale and will include 60 of the original households who have chosen to remain in the area. Phase 2 of the scheme will include 244 homes and, subject to planning permission, Orbit anticipates starting on site by March 2015.
The Mayor of London, Boris Johnson said: “Shared ownership is crucial in helping the unprecedented numbers of people in London desperate for good quality low cost housing. Families need larger properties and Erith Park is testament to the number of well-designed affordable three bedroom family homes with gardens that can be delivered with good planning, major regeneration and investment. I want the funding announced today to help thousands more Londoners own homes and create more developments like Erith Park delivering excellent affordable properties.“
Paul Tennant, Chief Executive of Orbit Group, said: “We are delighted to see the commitment to increasing the number of shared ownership homes by the Mayor of London. This funding will make a significant impact on the lives of people like our new residents at Erith Park, who want to get on to the housing ladder. Recent research by Orbit shows that demand for shared ownership homes outstrips supply by 10:1 so there is a clear need for more homes.”
Gentoo Genie provides long term Home Purchase Plans for first time buyers and long term renters which enables them to buy shares in their home every time they make a monthly payment. This is the first time the scheme is being introduced to London following Genie’s successful work in the North East of England. The GLA’s funding is from the Mayor’s Housing Covenant revolving fund and will be repaid in full within ten years.
Steve Hicks, Managing Director of Genie, said: “We set up Genie as a way to help those people who want to get onto the housing ladder but who haven’t been able to because of a number of reasons, including saving for a deposit while renting. There has been a lack of innovation in the housing market which has left would-be homeowners feeling frustrated and unable to buy their own house. This 10 year partnership with the GLA will help customers into a minimum of 2,000 new homes in the capital who otherwise would have struggled to own their own homes, because of the difficult market conditions in London.”
The First Steps Challenge Fund is part of the £1.45bn the Mayor has secured from the Government for affordable housing delivery in 2015-18. The money is being made available on a recoverable basis and could take the form of an interest-bearing loan or equity investment, to encourage new players to deliver shared ownership homes and greater institutional investment into the tenure. When the funding is paid back it can be reinvested into delivering more homes. This is part of the Mayor’s London Housing Bank initiative to make longer term investment into housing and increase the pace of housing supply.
Notes to editors
1. For more information on the Mayors affordable housing and First Steps visit www.london.gov.uk/priorities/housing-land/first-steps-to-home-ownership
4. Changes implemented by GLA to help cut red tape and make access to housing easier: Measures in the Further Alterations to the London Plan, London Housing Strategy and 2015-18 Mayor’s Housing Covenant Funding prospectus to prevent local authorities from applying lengthy local eligibility requirements.
- Creation of the First Steps portal, reducing the customer journey in applying for First Steps homes and reducing the cost to the public purse significantly.
- Removing key worker restrictions so Londoners on low to moderate incomes in all sectors are eligible for First Steps homes.
- Allowing existing owners to port their equity to a new home when necessary.
- Opening up eligibility to include existing First Steps owners who need to move.