The government must provide an extra £20bn if it is to resolve London's key-worker housing shortage through initiatives such as shared ownership.
That was the claim of the latest monthly study of the residential sector by estate agent FPDSavills.

The report criticised mayor Ken Livingstone's insistence that half of all new developments should be set aside for affordable homes.

His focus on the provision of keyworker housing through such measures was "in danger of becoming a red herring", it said.

Richard Donnell, head of residential research at FPDSavills, said: "What Livingstone has [provided] is one of many solutions. It will work in the short term but it is not going to deliver enough new homes."

Donnell's view was backed up by Lambeth council last week.

A spokesman confirmed to Housing Today that developers Manhattan Loft Corporation and St George had withdrawn from bidding for a 600-unit scheme because of the additional cost of providing 50 per cent affordable housing.

Donnell argued that policymakers should concentrate on identifying brownfield sites to provide affordable housing, rather than increasing funding for schemes such as the Starter Home Initiative.

He said that the obvious means of ensuring the market provided sufficient affordable housing would be for large RSLs to consolidate, and then do the building work themselves.

This would pose a threat to house builders over 10-15 years, he added.

A spokeswoman for the Greater London Authority responded angrily to Donnell's claims that Livingstone's demand for 50 per cent affordable housing on all new schemes hindered the provision of new homes.

"There is absolutely no basis in fact for that. It is just not in the mayor's interest to jeopardise the supply of new and affordable housing," she said.

But John Barker, chief executive of Moat Housing, which has 900 keyworker homes, agreed with Donnell.

"The government is clearly not going to pump money into key-worker housing at levels that would change housing market dynamics [such as house prices]."

A DTLR spokeswoman said: "We have increased spending on social housing through the Housing Corporation and local councils from £1.5bn in 1997/98 to £4bn next year."

Source

Housing Today