Ministers confirm plans to reduce London’s affordable housing quotas

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Ministers have confirmed plans to reduce affordable housing quotas in London as they look to reverse the recent collapse in housebuilding in the capital.

Steve Reed, the housing secretary, said on Thursday developers would be allowed to qualify for fast-track planning status if their projects included just 20% affordable housing, down from the current target of 35%. Of those 20% however, 60% will have to be available at the cheapest social rents.

The plans, which were revealed last week by the Guardian, come after new housebuilding in London shrank to just a few thousand units a year, with developers saying they are constrained by high interest rates and sluggish planning procedures.

They have caused anger among homelessness campaigners and some Labour MPs, however, who say the government is undermining its pledge to tackle homelessness.

Reed said in a statement: “Getting spades in the ground in London is crucial if we want to see the biggest increase in social and affordable housing and meet our target of delivering 1.5m homes.

“I have worked closely with the mayor of London to give the capital the shot-in-the-arm it needs to ensure more Londoners have an affordable home of their own.”

Sadiq Khan, the London mayor, said: “There is now a perfect storm facing housebuilding in London due to a combination of high interest rates, the rising cost of construction materials, the impact of the pandemic and ongoing consequences of Brexit.

“All of this means we are now in the midst of the most difficult period for housebuilding since the global financial crash. Urgent action is required, which is why I’ve been working with the government on this package of bold measures.”

Under the plan, developers will be allowed to qualify for fast-track status with a reduced number of affordable homes. If, however, the company fails to build quickly enough they will be made to hand over some of their profits to the local council to build additional affordable units.

Housebuilders will also be given relief from the local tax which is designed to help pay for local infrastructure such as roads and GP surgeries. And they will be allowed to reduce the number of bicycle storage spaces per unit, in a move officials said reflected the increased use of dockless bikes.

The package, which is set to expire on 31 March, 2028, is designed to kickstart building after a sudden decline in recent months. A recent report by the consultancy Molior showed builders started work on just 3,248 private sector homes in the first three months of this year.

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Some charities say the measures will make the capital’s homelessness crisis worse.

New research by Shelter shows that Khan’s decision to introduce the 35% quota in 2017 prompted a rapid increase in the number of social homes being built in London.

In the seven years before the target, developers built 1,678 new social homes in the capital. That figure was more than four times higher in the subsequent seven years, at 8,460.

Matt Downie, the chief executive of Crisis, said: “The government has said they want to end the moral stain of homelessness. We back them to the hilt in that ambition – but we have real concerns that the solution they are presenting here doesn’t come close to addressing the scale of the problem.

“Over the years we’ve seen how fiddling with targets and putting faith in market forces leads to nowhere near enough social rent homes being built. The stark and shameful truth of this is record levels of homelessness.”

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