A new housing report by the think tank Centre for London has found that more flexible funding and collaborations between Inner and Outer London boroughs could build more affordable homes across the capital, while maintaining London’s mix of communities and neighbourhoods.

Read the report

While the demand for affordable homes is increasing, housebuilding has consistently fallen below London Plan targets and less than a quarter of homes built in 2014/15 were affordable. The report, Strength in Numbers: Funding and Building More Affordable Homes in London looks at two of the main barriers preventing boroughs from building; the cost of land and the availability of funding.

It shows how the difference in land value between in Inner and Outer London means that some boroughs lack land which they can afford to develop, while others have land available but lack public funding. The research found that:

• The cost of land accounts for more than half of the cost of building a standard flat in a prime central London location, as opposed to around a quarter of the cheapest suburban equivalent.
• The funding gap required to build affordable homes can be five times higher in prime central London locations than in the cheaper suburbs.

The report argues that partnerships between Central boroughs that have available funding and Outer London boroughs that have land at reasonable prices could deliver significantly more affordable housing than just building locally.  Working together to build mixed-tenure schemes in areas with low land prices, and relatively low proportions of affordable housing, could boost supply, while preserving London’s tradition of mixed communities.

The authors highlight that cross-borough collaboration would require bespoke deals to benefit the residents of all boroughs involved. These deals should, for example, ensure the fair allocation of affordable housing between the boroughs contributing funds and the borough contributing land, provide for a mix of tenure and housing types in different neighbourhoods, and ensure a fair deal for public services.

However, the report recognises that such deals may be difficult to reach. It goes onto suggest that the Mayor of London should play a role in facilitating and incentivising collaborations. Specifically, the authors recommend that:

1. The Mayor should help broker formal borough partnerships in housing delivery, and use its policies, powers and resources to facilitate and encourage collaboration.
2. The Mayor should incentivise collaborative affordable housing delivery through more flexible or enhanced levels of grant for consortia of local authorities, together with housing associations and private developers.
3. The Mayor and London boroughs should also develop a more strategic London-wide approach to building new affordable housing, embedded in the London Plan.

To further the impact of these partnerships, the report also calls on the government to relax the rules on local authority borrowing and the use of receipts from right-to-buy, and to allow flexibility on spending out of borough.

Silviya Barrett, Research Manager at Centre for London and author of the report said:

“Boroughs are already pooling their resources in departments such as adult social care, and our research suggests there’s appetite to collaborate on housing delivery too.

“At a time when London boroughs are having to house their most vulnerable residents beyond the city’s boundaries, increasing the supply of affordable housing in cheaper areas of London could provide better access to jobs and social networks than the present situation, while preserving the mixed communities that characterise the capital.

“There is not a ‘one-size-fits-all’ solution, but cross-borough partnerships have the potential to significantly increase the number affordable homes that Londoners badly need.

“While many boroughs are looking to work closer together, if central government is serious about supporting councils to build more, it must cut red tape attached to how available funding can be spent.”

Ken Jones, Director of Housing Strategy at London Borough of Barking and Dagenham, said:

“If London’s housing crisis is to be tackled it will need the active involvement of London Boroughs alongside all of the other players to increase the supply of homes that are genuinely affordable.

“This will mean looking for innovative solutions in terms of funding and working more collaboratively, particularly around joint procurement on house building to drive the economies of scale that can come from offsite manufacture.”

Killian Hurley, Chief Executive, Mount Anvil, said:

“We are seeing better housing solutions come out of collaboration across boroughs. Progressive boroughs are increasingly open to higher density, provided that it is a design-led scheme with appropriate levels of affordable housing.

“We support the Mayor’s aim to boost the supply of affordable housing through the SPG proposal, striving to increase supply across all tenures – this is good for Londoners and London itself.”

Lord Kerslake, Chair of Peabody and President of the Local Government Association, said:

“In partnership and with more strategic collaboration, all strands of government, housing associations and private developers can radically improve the supply of desperately needed new affordable homes in London.

“This is not mission impossible.  Government could lift borrowing caps on local authority capital, devolve more fiscal powers to the Mayor, and re-evaluate the approach to public land disposal.

“The Mayor could lead and broker formal cross borough partnerships and consortia, helping to assemble land, reduce bureaucracy and lever in additional private investment. And in turn, housing associations, councils and private developer partners could make real progress on new housing delivery in the capital. This report signposts the way to achieving to this.”

Notes to editors:

• Centre for London finds new solutions to the capital’s challenges. We publish research. We hold events. We collaborate and influence. The capital’s only dedicated think tank, we work across economic, environmental and social issues, and develop rigorous research and bold, long-term solutions. We act as a critical friend to London leaders and policymakers.
• All figures take from Strength in Numbers: Funding and Building More Affordable Homes in London, Centre for London, 2017
• This project would not have been possible without the support of our sponsors – City and Westminster Property Associations, the City of Westminster, the London Boroughs of Ealing, Lewisham and Southwark, Mount Anvil, Peabody, the Royal Borough of Kensington and Chelsea, and Thames Valley Housing Association.