黑洞社区

The cross-subsidy model used by housing associations to pay for their social housing commitment is not working for London, according to the capital鈥檚 mayor Sadiq Khan.

As property prices have stagnated, the ability of housing associations to fund the building of homes for affordable rent and shared ownership have run into problems.

Speaking at the Homes for Londoners conference yesterday (Tuesday), Khan said: 鈥淲hen you bear in mind the number of homes we need in our city and look at the past the only time we build anywhere near the level of homes we need is when councils are building as well. With the best will in the world the private sector isn鈥檛 going to build more than 30,000 homes. They don鈥檛 want to flood the market.

鈥淪o we have to supplement that with subsidised housing, built either by councils, housing associations or others.鈥� 

Khan said it would require grant cash and investment from central government to ramp up local authority housebuilding activity.

鈥淲e鈥檝e done the homework for the government and worked out if it was to increase funding to London by 拢700m a year for seven years it would get us the homes we鈥檇 need.鈥�

Responding to the mayor鈥檚 comments, Susan Hickey, chief financial officer at housing association Peabody, said: 鈥淲e鈥檙e working with the mayor, London鈥檚 boroughs, and others to provide thousands of new genuinely affordable rented homes for London.

鈥淭he limits to the cross-subsidy model are well known. Whilst sales values and the ability to reinvest surpluses remain strong, government grant to complement the sector鈥檚 own investment will be the most effective way of building more much needed new social rented housing.

鈥淭he stable revenues from social lettings also make Peabody and the sector an attractive proposition for investors which allows us to lever in more money to tackle London鈥檚 housing challenges. This also has the additional benefit of de-risking sales activity, enabling us to deliver more in the long-term.鈥�