London to get £1.5bn share of housing loan scheme

Affordable housing delivery in London will get a "kickstart" of £1.5bn in government-backed low-interest loans to housing associations, the mayor of London has said.

The funding represents the capital's share of a £2.5bn national loan scheme announced by the government last week and will be administered by City Hall through a new City Hall Developer Investment Fund.

The loans will be offered to housing associations at an interest rate of 0.1% over 25 years, well below current market rates.

The Conservatives criticised Sir Sadiq Khan's handling of housing policy, describing the loans as a rescue package for developments that Londoners would pay for through their taxes.

City Hall said the funding would help unlock stalled or complex housing developments and support the construction of thousands of new homes.

Sir Sadiq said: "We're doing something that hasn't been done in decades – providing low-interest loans to build the affordable homes Londoners desperately need.

"There are so many good, affordable housing projects in our city that need some extra support to get going. These low-interest loans will help make these homes a reality."

He said he would "continue to work closely with government, councils and other partners" to speed up the delivery of "genuinely affordable homes" across the capital.

City Hall said the £1.5bn allocation, combined with £322m of grant funding announced last year through the National Housing Delivery Fund, brings the total investment available through the fund to £1.82bn, close to its £2bn ambition.

However, City Hall said housebuilding in London continued to face significant pressures, including high interest rates, rising construction costs and delays linked to building safety regulations.

A report released last month found that house-building in the capital fell by 88% over the past decade.

The government said the loans are intended to complement its new 10-year £39bn Social and Affordable Homes Programme, which aims to deliver around 300,000 social and affordable homes across England.

Housing and Planning Minister Matthew Pennycook said the funding would give London "the tools it needs to address the severe housing delivery challenges it is facing".

Lord Bailey, the City Hall Conservatives' housing spokesman, said: "I will always back anything that truly delivers more homes for Londoners, but let's not pretend we got here by accident.

"We are in this position because the mayor's housing policies have fallen woefully short of Londoners' needs. These loans are just a rescue package for developments which he has made unviable by his constant interference in the market and poor judgment."

He added that Londoners are being "asked to foot the bill" through their taxes to "clean up a crisis they did not create".

Bidding for funding under the government's wider housing programme is due to open next month.

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