The fund’s objective is to revive housing schemes that have been stalled due to economic challenges

The Mayor of London has unveiled a £100m housing fund today, that will allow housing providers to apply for grant to turn market-rate homes on stalled development sites into affordable homes.

Sadiq Khan

Source: GLA

The Mayor of London has launched a £100m fund to kickstart building of affordable homes on halted development sites 

The new money will be made available from recycled capital grant funding. This consists of money returned to the GLA by housing providers when, for example, shared owners ‘staircase’ by purchasing more of their home.

The primary focus of the Housing Kickstart Fund (HKF) is to assist councils and housing associations in reviving paused housing schemes. However, the GLA is also open to discussions with private developers who are involved in halted projects as it recognises that the current market is challenging for both public and private developers.

For a private housebuilding scheme to access grant, developers must be partnered with a council or housing association. 

There isn’t a specific minimum requirement for affordable housing delivery to be eligible for the Housing Kickstart Fund (HKF) grant, however, the development should aim to provide as close to 40% affordable housing as possible. 

Sadiq Khan has also announced a new accelerated funding route (AFR), which aims to create ‘a more simple and predictable methodology’ to help developers deliver over 40% affordable homes on their sites by providing more predictable grant financing.

This change to how the mayor’s Affordable Housing Programme (AHP) works will also help councils and housing associations determine the amount of grant that can be applied to projects.

The GLA says this will increase the likelihood of delivering schemes that offer a high proportion of affordable housing while minimising the need for negotiation.

>> See also: London council pauses four developments amid spiralling costs

>> See also: Slump in housebuilding activity accelerating

GLA policy requires partners to deliver a minimum of 35% affordable housing by habitable room without using grant funding in the first instance.

Under the AFR, the GLA enables partners to seek grants for all affordable homes above the first 20% per unit, without requiring an additionality viability assessment. This applies to projects aiming to deliver a minimum of 40% affordable housing based on habitable room count.

Between 1 April and 30 September 2023, there were 11,530 starts on site and 11,297 new homes completed through Homes England schemes.

These figures are lower compared to the same period in 2022, when 14,812 housing starts on site and 12,118 housing completions were delivered through Homes England programmes.

According to government housing supply indicators, in the year to 30 September 2023, housing starts in the South East fell by 15%.

Khan said: “We’ve made important progress, hitting the Government’s flagship 116,000 affordable homes target, which was missed outside of London and delivering council homebuilding at double the level of the rest of the country combined.

“There is much more to do and this new fund will help provide more of the homes Londoners so desperately need but we need greater Government investment to ensure we can create a fairer and more prosperous London for all.”

Fiona Fletcher-Smith, chair of the G15 group of London’s largest housing associations, said: “As the largest providers of affordable housing in the capital, G15 members very much welcome any initiatives that will boost supply. The Housing Kickstart Fund will help to unlock stalled developments and increase the number of affordable homes. We also desperately need innovative funding solutions and a long-term plan to boost new supply in London, and will continue working with the Mayor of London and other partners on this”.