Developers will be able to cut their affordable housing targets to build homes faster or risk sharing their profits with councils, the Housing Secretary has told MPs.
The move to cut the number of affordable homes threatens to spark a major row with Labour MPs and councillors, as it breaks a key pledge to act upon the housing crisis.
Developers in London will be given a new “use it or lose it” route to build houses faster in exchange for delivering fewer affordable homes.
Steve Reed has agreed to temporarily cut the proportion of affordable homes from 35 per cent to 20 per cent per development as he seeks to meet the Government’s 1.5m new homes target.
However, MPs briefed on the plans say that if developers fail to build quickly enough, councils will be able to clawback a share of the profits over a certain threshold.
This money will be available to spend on more affordable homes once the market improves.
MPs in the meeting raised concerns over the plans with senior backbencher Rosena Allin-Khan voicing fears over how it would be sold to the public.
Those present also voiced their worries about developers “cooking the books” in order to drive down the number of affordable houses in their projects. Others were angry that the policies have not been announced on the floor of the House and made more public to members to debate as well as voters.
According to one MP in the room, James Murray, chief secretary to the Treasury and MP for Ealing North, supported the plans insisting that the 35 per cent target was the right level in 2017 when it was introduced.
“I think having it drop to 20 per cent on a time limited basis is right thing to do to speed things up,” he told his colleagues, adding that it would only be on a time limited basis to avoid “baking in” lower affordable housing levels into land values.
Another London MP supported the move, stating: “Brexit, war in Europe and Trump have all changed some dynamics but the housing crisis cannot be ignored. The last government ignored building and we are now in a crisis.”
Despite an outcry, ministers believe drastic measures are needed to breathe life into London’s faltering housing market, which has nosedived over the last 12 months.
Housebuilding in London has ground to a halt, with just 2,040 new housing starts coming in the first half of this year — 55 .9 per cent lower than a year ago, according to the Ministry for Housing, Communities and Local Government.
This is well below the 88,000 new houses required every year for that the Government says are required in the capital alone if it is to hit its 1.5m housing target by the end of the parliament.
It comes after The i Paper was handed a leaked memo last week that revealed discussions were taking place between the Housing Secretary and the Mayor of London to slash the number of affordable houses required with each development from 35 per cent to 20 per cent.
MPs and councillors were left angered by the plans. As part of its manifesto, Labour promised to strengthen planning obligations to ensure new developments provide more affordable homes. Khan’s London Plan pledged all new developments will have at least 35 per cent affordable quotas, but this has been drastically scaled back.
Just 15,000 to 20,000 homes will be under construction in London by the beginning of 2027 unless the Government steps in, a major forecast by Molior London said last week, which tracks housing starts in the capital.
Developers have blamed the high levels of affordable housing as one of the reasons for making projects financially unviable at a time with soaring building costs.
But social housing provision is just one of several factors that are holding back the building of new houses, with the beefed up Building Safety Regulator drawing significant blame for holding up approvals for new homes.
According to think tank the Centre for Policy Studies, the BSR has held up 92 per cent of housing applications, with the median wait time growing to 36 weeks, acting as a major drag anchor on new homes in the capital.
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