Affordable Rent caps in London blocked

Plans to cap Affordable Rents in London axed

Councils in London should not set borough-wide caps on Affordable Rents where they might limit the supply of affordable housing, according to revisions in the London Plan.

The restriction comes on the back of representations made by the National Housing Federation (NHF) on the Mayor’s ‘Minor Alterations’, proposed in February 2012.

Affordable Rent is the Government’s new housebuilding programme which allows housing association to charge up to 80% of the market rent on new homes. The increased rents replace the cut in capital grant and are thus intended – with extra borrowing – to finance new supply.

Under the programme 146 providers will share nearly £1.8 billion to build 80,000 homes up to 2015, with London alone securing 36% (£628m) of the funding to deliver 21,856 affordable homes.

The average level of Affordable Rent property in London is expected to be around 65% of the market rent.

The London Plan now emphasises that boroughs should not set borough-wide caps on Affordable Rents where those caps might limit the supply of affordable housing.

In addition, the Federation has claimed another key concession regarding off-site affordable housing provision.

The plan now also confirms that any off-site provision of affordable housing under Section 106 agreements must be robustly justified, and that contributions should only be used for the provision of affordable housing. 

Lizzie Clifford, Interim London Lead Manager, said: “These changes are a step in the right direction for London housing.

“We welcome the Mayor’s leadership in ensuring that the planning system supports the delivery of sufficient affordable housing in mixed communities throughout the capital.

“We would urge the Mayor to strengthen the Plan further by requiring local planning authorities to make greater provision for both housing and affordable housing, to meet objectively assessed local need.”