The Mayor of London Boris Johnson MP has announced a significant boost for shared ownership in London today with 1000 new homes to be developed under a pioneering funding model with major institutional investors.
The announcements are part of the Mayor’s drive to accelerate construction of shared ownership properties in London, making home ownership accessible to many more Londoners. 52,000 Londoners have already been helped into shared ownership homes through the Mayor’s First Steps programme, and he aims to double the number of shared ownership units built in London by 2020. The Mayor has also directed the Greater London Authority to begin purchasing land in areas suitable for further shared ownership developments.
The two investments with Chaco Ltd and the London Borough of Barking and Dagenham working with institutional investors have been allocated £45 million from the Mayor’s First Steps Challenge Fund. A further £120 million from long-term private sector investment will add to the Mayor’s loan funding. The fund is aimed at attracting investment from institutions such as pension funds and insurance companies to build part-buy, part-rent housing for low and middle income Londoners. It is expected to attract more than double its initial investment, providing strong value for the taxpayer. The Fund adds to successful efforts to encourage institutional investment for the purpose-built private rented sector, building a bigger pool of investors and new providers to support housebuilding. The Mayor’s First Steps scheme has so far helped 52,000 Londoners to buy a home, with typical household incomes of £40,000, and some deposits as low as £5,000.
In addition the Mayor has instructed the GLA to explore purchasing land in areas, such as Housing Zones, where the shared ownership model could be expanded. This would ensure vacant plots are put to productive use and preserve the developments for shared ownership properties. The GLA has successfully brought to market all of its surplus sites since the Mayor was elected, providing almost 50,000 new homes, and will now look to make acquisitions where it will accelerate or unlock new homes.
Mayor of London Boris Johnson MP said:
“This scheme is a brilliant way to open up home ownership to Londoners on modest incomes, making the first step on the property ladder just that little bit easier. We’ve already helped 52,000 Londoners to buy their first home and realise their dream, and I’m very pleased that the first institutional investors have come on board through my First Steps Challenge Fund. This is a great vote of confidence in a housing model which is incredibly popular with consumers, and we need to see more of it in London.”
The first investment under the First Steps Challenge Fund scheme will be delivered in partnership with the London Borough of Barking and Dagenham and part-funded by institutional investors, and result in up to 500 new shared ownership homes delivered in the borough by 2020. The Greater London Authority will contribute £22.5 million to the development, which will be more than matched by pension funds and other institutional investors, and repaid within 15 years with interest.
The second investment will be delivered in partnership with Chaco Ltd, an organisation that provides institutional non-bank funding for housing associations and registered providers, to build 500 new shared ownership homes across London. Chaco Ltd has existing relationships with investors such as Aviva, CBRE and M&G Investments and it is hoped that this funding can help to stimulate further investment from these organisations into the sector. The Greater London Authority will provide another £22.5 million to this project, which will leverage significant private sector funding and be repaid over time. Chaco Ltd are working with housing association partner Genesis to develop a structure to deliver the units.