Homes for Londoners Land Fund

The role of the Land Fund is to support:

• bringing land and development opportunities forward for housing development more quickly
• ensuring development of optimal, policy-compliant levels of affordable housing with at least 50 percent affordable housing delivered on public land
• land assembly
• working with partners to fund land, infrastructure and enabling works for schemes where additional housing may be possible, or where acceleration of delivery may be achieved with additional investment
• having a greater level of influence over the level, pace, quality and tenure profile of affordable housing delivery in London
• ensuring that more of London’s planned and permissioned housing opportunities are proactively supported through to delivery, especially where these are stalled
• diversifying the housing development sector by supporting innovative approaches to housing delivery and SME registered providers and private developers

The GLA is flexible in the way it can provide assistance through the Land Fund. Funding could take the form of grant funding, debt finance or equity investments. Some of the ways the GLA could work with organisations to deploy funds include:

• senior or mezzanine debt finance for land and/or development costs
• equity investment
• gap funding
• land assembly
• infrastructure
• site remediation

Proposals will be expected to clearly demonstrate the organisation’s capability and capacity to deliver: the proposed homes within agreed timescales; the projected returns including anticipated repayment profile; and that the delivery model will be compliant with Subsidy Control (formerly State Aid) rules.



Examples of previous land fund investments include:

• the provision of land acquisition finance for the former Holloway Prison site in the LB Islington to Peabody Trust;
• the provision of mezzanine finance for City & Dockland's Build-to-Rent project at Mitre Yard (OPDC); and
• the acquisition of surplus land on two hospital sites at St Ann’s Hospital in LB Haringey and North Middlesex Hospital in LB Enfield, capable of delivering up to 1,000 homes.

The Land Fund is split into different stands, each of which has different programme and output requirements, risk profiles and expected return parameters. GLA officers will designate which part of the Fund is used to finance your proposal.

Below you'll find the key parameters that should be considered in proposals submitted:



Return on Investment

Delivery of homes and affordable housing provision

Delivery of affordable homes is a key Mayoral priority. A minimum requirement for investment will be delivery of GLA planning policy compliant levels of affordable housing which is 35 per cent on privately owned land and 50 per cent on public sector land.

Increasing the speed of delivery is also key, and counterparties will be asked to demonstrate how the GLA’s funding unlocks and expedites delivery. Projects that are capable of starting on site by March 2022 or earlier will be prioritised. Applications that deliver the greatest value for money, and maximise the amount of affordable homes, will be prioritised.

Social and community benefit

The Mayor is keen to support proposals that clearly demonstrate benefits are provided for the communities within which they are located. As part of this, proposals must meet a pre-determined benefit cost ratio (BCR) threshold to qualify for funding. BCRs will be calculated by the GLA based on the principals as set out within the HM Treasury Green Book and MHCLG Appraisal Guide.

Financial

The GLA will always seek to recover its investment and seek a commercial return commensurate to project risk. The GLA caps investment at £50 million per contracting entity and will only provide funding above this rate by exception.

Risk Appetite

The GLA is looking to build a balanced portfolio of interventions. We consider a variety of proposals and appreciate that projects vary in risk and levels of return. Lower returns may be acceptable on certain projects where significant and demonstrable social benefits are unlocked as a result of the GLA's investment, e.g. the increase of affordable housing outcomes against an original planning consent or requirement, and subject to compliance with Subsidy Control rules.

The GLA will analyse the key risks associated with proposals prior to making investment decisions. Key risks will include deliverability and recovery of investment. However, the GLA will take a holistic view of development, in line with Mayoral objectives and can therefore consider a wide range of proposals under the Fund.

Opportunities for co-investment, partnering and risk sharing can be explored through this fund.

Investment Term

A key objective of the Fund is to unlock housing delivery through a variety of means. Shorter term investments (up to five years) will be prioritised to enable the GLA to recycle funding to unlock further delivery. However, an element of the Fund will target longer term opportunities, including industrial land, regeneration projects and infrastructure heavy interventions.

Complete an expression of interest form – partners are asked to demonstrate how their proposals unlock housing delivery.

Evaluation and clarifications – expressions of interest forms will be evaluated. Proposals that demonstrate a return on investment and/or ability to deliver housing starts by March 2022 will be prioritised.

Due diligence process – Proposals require a fully open book approach and will be subject to detailed financial, legal and property due diligence undertaken by our panel of consultants. This due diligence is typically at the counterparty's costs, albeit the GLA can be flexible for smaller partners and charities.

Approval – proposals will be subject to delegated approval through a GLA Director’s Decision form.

Please refer any queries to [email protected]. We will aim to respond to all queries within three working days.

The Funds will be administered through a multi-staged assessment, decision-making, and monitoring process. Propositions that clear due diligence undertaken will be reviewed in an agreed series of senior officer meetings, some including independent members, prior to being submitted for approval through a GLA Director’s Decision or Mayoral Decision form.



Successful proposals will be subject to ongoing monitoring by dedicated GLA officers to ensure that approved projects achieve the key agreed targets, outputs and milestones and, where appropriate, investments are recovered.

You can access public minutes of the Land Fund Investment Committee here.