Khan stakes 10,000 council home plan for London on extra borrowing

“Councils have a vital role to play in tackling the housing crisis in London, this extra borrowing will help support councils further”.


Mayor of London Sadiq Khan has set out how a recently secured extra borrowing will boost his Building Council Homes for Londoners programme and a new generation of council housing in the capital.

Khan has published guidance inviting the capital’s councils to apply for this borrowing headroom, which will be administered by City Hall, and confirms the successful negotiation of extra flexibilities intended to make this borrowing easier and more attractive.

Deputy mayor for housing and residential development, James Murray, said: “Since May’s elections I have been meeting council leaders from across London who are ambitious and keen to building council housing at a much greater scale.

“Councils have a vital role to play in tackling the housing crisis in London – as part of the Mayor’s Building Council Homes for Londoners programme.

“This extra borrowing will help us to support councils further, and to make the case to minister for the step change in powers and resources that London needs to truly fix the housing crisis.”

As recently confirmed by ministers, Khan has secured at least half of the £1bn additional Housing Revenue Account (HRA) borrowing announced by the chancellor last year specifically to help councils in London build more social housing.

In 2013, the previous government announced additional borrowing of £300m, but not all of it was taken up because the conditions attached to the programme were unnecessarily restrictive.

For this programme, Khan has secured more flexibility from government.

For example:

  • The additional borrowing can be used with either affordable housing grant funding or Right to Buy receipts to fund new housing
  • The bidding process has been streamlined and the bureaucratic burden on councils reduced
  • City Hall will work with councils to manage programmes flexibility.

Despite these flexibilities, the additional headroom is limited and only available over a three-year fixed period, with Khan clear that the government must back councils to build again – including by abolishing HRA borrowing headroom caps altogether.

Data soon to be published by the Homes for Londoners team at City Hall shows the percentage of households in London in social housing has fallen to just 21%, down from 35% in the early 1980s and 25% in the early 2000s.

In the 1960s and 70s, councils built around two thirds of London’s new homes.

Due to government funding cuts and top-down restrictions, last year they built fewer than 500.

The Building Council Homes for Londoners programme, launched in May, aims to support 10,000 council housing starts by 2022.

Developed in conjunction with councils, the programme offers a range of support alongside the lifting of the borrowing cap, including:

  • Higher grant rates (£100,000 per home for social rent or London Affordable Rent)
  • An offer to help councils spend their Right to Buy receipts more efficiently
  • Practical help for councils to gain the expertise and capacity they need to gear up for council housing delivery.

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