The Mayor of London has opened a new £200 million investment scheme for developers and housing associations that he hopes will help accelerate the building of thousands more low cost homes.
The London Housing Bank offers tailored financial support to speed up the construction of homes compared to existing development timetables. For example building later parts of large multi-phased housing schemes earlier than scheduled.
The Bank offers low cost loans starting at one per cent interest to incentivise development partners to build up to 4,000 homes on a range of sites, with the condition that these homes will be rented to Londoners at low cost rent (with a minimum discount to market of 20 per cent) for at least 7 years.
The loan will be available for up to sixteen years and after it is repaid, developers will have the option of selling the homes to the current occupiers to support home ownership, selling into the market, or retaining as affordable homes to use as long-term rent. The London Housing Bank prospectus is being launched at the same time as the Government launches a national investment scheme for developers to boost house building, with the initial funding for the Housing Bank being made available to the Greater London Authority by the Government.
The Mayor of London, Boris Johnson, said: “Through the pioneering London Housing Bank, I’m challenging the capital’s developers to get building, and deliver the homes Londoners need, as fast as humanly possible. Loans are available from a £200m pot to significantly accelerate the pace of development, especially on bigger schemes, and unlock additional supply. Through this exciting new fund we hope to provide thousands of brand new homes many years sooner than would otherwise be possible for hardworking Londoners.”
The majority of funding is expected to be low cost interest bearing loans, with equity loan bids being considered on a case-by-case basis.