London Tories say stats signal ‘pathetic’ home starts on TfL land

But Mayor’s office maintains key commitment is on track as capital needs seven times more funding to meet affordable housing targets.

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London Tories say stats show Sadiq Khan is to miss a key housing target with a “pathetic” number of homes started on TfL (Transport for London) land.

But the Mayor’s office maintains TfL starts are on track – working “at pace” toward 10,000 homes by March 2021

The Tory move has momentum in new figures showing just 322 starts so far – 3% of the overall target.

No homes were started on TfL land during the first year of Khan’s mayoralty, but in 2017/18, 276 homes were started in Ealing and Islington.

In 2018/19, 46 homes were started – all on the same estate.

“These new figures will be met with disbelief. Three years into a five-year programme, this mayor has started a pathetic 3% of the overall number of homes he promised to build on TfL land,” said GLA Conservatives housing spokesman Andrew Boff.

“The Mayor has a penchant for blaming others for his own mistakes, but on this he has nowhere to turn.

“Khan has all the money, the staff and the land he needs to get homes built. What he lacks is the determination and the ability to deliver – the buck stops with him.”

Khan’s overall record on housing has come under fire over recently.

Last month it was revealed that, despite being given £4.82bn by the government in order to build 116,000 homes by April 2022, Khan had only started 34,515 new homes – 30% of the overall target.

A spokesperson for the Mayor of London said: “The Mayor is delivering record numbers of new social and affordable homes, starting 14,544 last year – more than in any year since City Hall took control of housing investment in the capital and exceeding the target of 14,000 agreed with government ministers.

“TfL continues to work at pace towards the ambitious target of starting on sites with capacity for 10,000 homes by March 2021, and the programme will continue to build momentum over time, with up to  1,000 homes expected to be started on site by the end of this financial year and the majority of schemes expected to start in 2020/21.”

Khan’s Transport Strategy outlined the ambitious target to start on TfL sites, with capacity for 10,000 homes by March 2021, and set out his commitment to 50% affordable housing on all sites brought to the market since May 2016.

The Mayor’s Office says work is underway on more than 300 homes, with site preparation underway for 350 more, 50% of which will be affordable.

Of the 14,544 affordable homes started in 2018/19, 3,991 were at social rent levels and 1,916 were council homes, more than in any year since 1984/85.

  • A report published by the GLA today (24th June) says London will need seven times more funding than it currently receives from the government for the Mayor to meet his long-term affordable housing targets

Labour’s London Assembly Housing Spokesperson, Tom Copley AM, said the report revealed what had been “known for a long time” about the underfunding of affordable housing projects in London.

“Sadly, this is one of the many ways that this Government has held back crucial investment and devolved powers from the capital,” Copley said.

“Working with the Mayor to ensure that City Hall has the resources to deliver the genuinely affordable housing that Londoners so desperately need must be a key priority for the next Prime Minister.

“It is also vital that we see other measures on the table such as the fiscal devolution of property taxes to the capital and the end of the damaging Right To Buy policy.”

The analysis predicts a widening gap between costs and revenues.

Works costs are estimated to increase by 3.4% a year over the five years to 2023, while sales values are expected to only increase by 0.9% a year until 2023.

Social rents will reduce by 1% annually until 2020 and are expected to subsequently increase by less than 3.5% a year.

After accounting for these cost and income trends, the analysis model identifies average subsidy gaps – the amount needed to meet the gap between costs and income – of £284,000 per social rent home and £32,000 per shared ownership home over the 2022/23-to-2031/32 period.

The report says these subsidy gaps can be plugged through a combination of Section 106 financial contributions on private-led developments, cross-subsidy generated from the sale of market sale homes built by affordable housing providers, and government grant.

Identified in the new draft London Plan is a capacity for 65,000 new homes a year, 50% of which should be affordable, and the 2017 Strategic Housing Market saw a high level of need for social rent homes (72% of all affordable homes) in London.

The central scenario in the model comprises an Affordable Homes Programme of 325,000 new affordable homes (32,500 a year) running from 2022/23 until 2031/32, with a split of 70% social rent, 20% shared ownership, and 10% intermediate rent.

This contrasts with London’s 2016-22 Affordable Homes Programme, set to deliver around 16,600 affordable homes per year on average, with the tenure split weighted more heavily toward shared ownership due to restrictions on how funding can be spent imposed by the national government.

The subsidy gap between the cost of building 325,000 affordable homes, and what can be borrowed against and realised from the income streams of those homes, is £74.5bn over the 10-year period – an average of £7.5bn a year.

Assumptions adopted for the purposes of the research suggest that 9,600 affordable homes could be supported by private developers each year, equivalent to a financial contribution of £2.3bn a year – leaving a subsidy gap of £5.2bn a year to be filled from other sources.

Both housing associations and councils are expected to build an average of 5,700 market sale homes a year, reinvesting the profits into new affordable homes.

This market sale delivery generates ‘cross subsidy’ of an average of £0.3bn a year, with the ups and downs of the housing market leading to significant income variability across the new programme period.

As such, the grant required to deliver a new affordable homes programme of 22,750 social rent homes, 6,500 shared ownership homes, and 3,250 intermediate rent homes is estimated to be £4.9bn per year (nominal).

This is equivalent to grant covering 48% of the costs of non-Section 106 affordable homes, a figure which is at the lower end of the typical range of grant rates prior to 2008.

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