London Mayor takes First Steps to Tackle Affordable Housing
In a month of contrast for the property industry and political battles in other parts of Europe, property professionals are keeping a careful watch on what is shaping up to be a roller coaster year. As law enforcement agencies faced the masses at the March for Homes protest across the capital on January 31, London's Mayor, Boris Johnson, made headlines in the same month with his First Steps affordable housing programme. We take a look at the scheme and how much it answers the cries from around the capital.
London mayor Boris Johnson announced a cash injection of £220 million on January 5 as part of the First Steps programme that will deliver two new schemes which will tackle affordable property issues in the city. The London-based Challenge Fund aims to create 4,000 new, affordable homes between 2015 and 2020 on a shared ownership basis. Due to the recoverable nature of the funding - an estimated £180 million - money can be reinvested back into the property market to create more opportunities to provide affordable housing, with projections of assisting around 250,000 low and medium income residents by 2025.
Anyone who applies to the scheme must meet a set of eligibility criteria. Council and housing association tenants and armed forces personnel will take precedence over local priorities and other eligible buyers. If you have not been able to find suitable accommodation on the current open market, have a gross household income of no more than £66,000 or £88,000 (depending on your property needs) and do not own a home, the First Steps scheme may be for you. For those who are interested in First Steps and meeting experts and providers, the First Steps Home Show will be held at London’s Queen Elizabeth II Centre on Saturday 14 March from 10am to 5pm.
The mayor will then use the remaining £40 million as a loan to Gentoo’s Genie to deliver an innovative housing programme that will provide buyers with a way to own a property 100% after an initial agreement that will not require a deposit or mortgage. Using the money from First Steps, Gentoo aims to build 2,000 new homes over the next 10 years to help low and medium income families and individuals.
From the start of 2015, Boris Johnson has brought forward the issue of affordable housing after huge price influxes in 2014 forced many out of London’s housing market. To highlight his commitment to the cause, Johnson announced the First Steps Challenge Fund during a visit to a regeneration, affordable homes project at Erith Park in Bexley which will construct 80% affordable rent and shared ownership homes. The site, which was once a magnet for crime in the area, has been awarded £23 million from the affordable housing fund.
In a statement from the day, Boris Johnson claimed: “Shared ownership is crucial in helping the unprecedented numbers of people in London desperate for good quality low cost housing…I want the funding announced today to help thousands more Londoners own homes and create more developments like Erith Park delivering excellent affordable properties.“
With claims for more affordable housing in London climbing, projects that overwhelmingly favour affordable builds is welcome news. While momentum may be slow, Johnson’s £1.45bn affordable housing delivery fund secured from the government is likely to create a positive dent in the waning market from 2015 to 2018.
Despite moves to correct the lack of low-cost housing in the UK, and London in particular, the month of January has produced a mixed bag of headlines for those with an eagle eye on the issue. On January 24, it was revealed that the coalition’s right-to-buy flagship scheme has fallen short in providing property replacements - to the extent that only one affordable home has been built for every five sold in the social housing sector. Although the initial pledge by the coalition was to replace sold right-to-buy house like-for-like, between 2012 and the last quarter of 2014, 16,596 social housing properties were sold while just 3,141 were either built or under construction. This, alongside a lack of housebuilding throughout several decades in the UK, has resulted in more than 344,000 residents in London alone now waiting on social housing lists.
While these figures have spurred activists to take their frustrations to the streets, the current housing minister, Brandon Lewis, has defended the coalition’s stance: “Council house building starts are now at a 23-year high, with work started on more new council homes in the previous year than the entire 13 years of the last administration.”
With election tensions in the air and the upcoming European Central Bank’s QE expected to affect property markets across Europe, different housing policies will be advertised during the coming months to win over voters. As calls for policies that will stabilise the housing market have been put forward, such as land tax value changes and regulated rent controls, the politicization of housing issues and solutions could help to speed up agreements. While we wait for decisions to be made, people will be asking: has enough been done? First steps are always a starting point for something bigger, however, current news and trends suggest that the capital is in need of a quick sprint to bridge the affordable housing gap.
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