MD2754 Intermediate Housing Consultation: Part 2 Consultation Response

1.1 In August 2020, the GLA launched a consultation to gain views on how the Mayor might help to build on the current role of intermediate housing in London (“the consultation”) . The purpose of the consultation was to ensure that intermediate housing in London is well-placed to support recovery from the impacts of Covid-19 and meet the housing needs of those Londoners who may not access homes at social rent levels. The consultation was divided into the following sections:

• affordability and delivery;

• eligibility, prioritisation and allocation;

• supporting London’s key workers; and

• improving data on intermediate housing.

1.2 The consultation opened on 4 August 2020 and closed on 11 October 2020 and asked 23 questions (some of which had multiple parts). The consultation document outlined that changes to intermediate housing policy in London could be implemented through the Mayor’s planning powers or the Homes for Londoners: Affordable Homes Programme 2021-2026 (“the new AHP”).

1.3 Timescales set by central Government for agreeing the new AHP led the GLA to focus first on addressing those questions which were relevant to the design of that funding programme. A Part 1 Consultation Response Report (Part 1 CRR) (Appendix 1) is attached to MD2706 Intermediate Housing Consultation: Part 1 Consultation Response.

1.4 The work to analyse and develop recommendations in response to the feedback received on the other questions in the consultation (“the relevant questions”) is now complete. The recommended policy responses to the relevant questions are contained in the Part 2 Consultation Response Report (Part 2 CRR), which was published in March 2021 and is attached to this decision form (Appendix 2).

1.5 This decision approves, in light of the consultation exercise, the introduction of a number of policy interventions, primarily through the Mayor’s planning and investment powers. MD2706, which approved a number of policy interventions through the new AHP, is to be read alongside this Mayoral Decision.

Part 2 Consultation Response Report

1.6 The consultation document set out a range of issues and possible policy interventions which relate to intermediate housing and how it could be best implemented in London. The views of respondents were sought through a combination of both closed and open questions.

1.7 The consultation attracted 73 responses, of which 69 came from organisations and four from individual members of the public. In addition, Talk London hosted a survey and discussion threads which focused on some of the questions in the consultation. There were 1,315 responses to the survey and 154 responses to the online discussions.

1.8 The Part 2 CRR provides an analysis of the responses to the relevant questions in the consultation and outlines the recommended GLA response, including any potential policy interventions, and explains the rationale for each.

1.9 The policy interventions recommended through the Part 2 CRR will ensure that intermediate housing in London is well-placed to support recovery from the impacts of Covid-19 and meet the housing needs of those Londoners who may not access homes at social rent levels, including key workers. The recommended interventions will strengthen existing guidance and ensure the Mayor makes best use of his available powers in relation to intermediate housing in London.



1.10 The policy interventions recommended through the Part 2 CRR, and outlined below, will be implemented through the Mayor’s planning and investment powers, including through the Affordable Housing and Viability London Plan Guidance (AHVLPG) and through revisions to the GLA’s Affordable Housing Capital Funding Guide (CFG). ,

Proposed policy interventions

i. Affordability and delivery

These proposed policy responses are designed to support delivery and improve the affordability of intermediate housing in London:

Discounted market sale (DMS)

• The GLA will support the delivery of DMS homes where they are delivered on schemes that align with wider strategic housing policy objectives, such as community-led schemes and/or schemes that provide homes to groups of people who share a protected characteristic. This new policy will be included in the updated AHVLPG and revisions to the GLA’s Affordable Housing CFG.

• To ensure that DMS homes are affordable, the GLA will utilise its planning powers to strengthen existing guidance in the AHVLPG on market value and income caps, to ensure the provision of DMS homes is consistent with other affordable home ownership policies. This policy will also be included in revisions to the GLA’s Affordable Housing CFG.

• The GLA will utilise its planning powers to strengthen existing guidance in the AHVLPG to ensure DMS homes remain affordable in perpetuity, with income caps applicable to subsequent sales. This policy will also be included in revisions to the GLA’s Affordable Housing CFG.

Other affordable home ownership tenures

• The GLA will utilise its planning powers to strengthen existing guidance in the AHVLPG on market value and income caps for affordable home ownership, which will also be relevant to First Homes and homes sold through the Right to Shared Ownership (RTSO); and to introduce measures to ensure First Homes remain affordable in perpetuity.

• In January 2021, the GLA announced that it expects investment partners receiving funding through the Affordable Homes Programme 2021-2026 to use a 999-year lease for shared ownership where it is possible to do so, to offer long-term security to leaseholders and to minimise the cost and burden of leasehold extension processes. Since January 2021, new central government policy to adopt a 990-year lease model has been announced. For consistency, the GLA will confirm the expectation to use a 990-year lease for shared ownership (where possible) will apply to First Homes and to homes sold through the Right to Shared Ownership and this new policy will be included in revisions to the GLA’s Affordable Housing CFG.

ii. Eligibility, prioritisation and allocation

These proposed policy responses are designed to ensure that intermediate homes in London are targeted towards those who would most benefit from them:

Intermediate housing waiting lists and allocation policies

• The GLA expects local authorities and housing providers to adopt an equitable and targeted allocation process for all intermediate housing, having regard to regional and local eligibility criteria, and the established definitions of housing need. This additional policy expectation will be included in the updated AHVLPG.

• Housing providers receiving grant through the Affordable Homes Programme 2021-2026 that choose to set additional prioritisation criteria for the first three months of marketing new intermediate homes will be required to publish details of the criteria on which intermediate housing applications are considered. This policy requirement currently exists in the GLA’s Affordable Housing CFG for Social HomeBuy and revisions to the CFG will expand this requirement to apply to other intermediate homes.

• Where intermediate homes are delivered through the planning system, the GLA expects these homes to be allocated according to intermediate eligibility and/or prioritisation criteria, which can include locally defined criteria. Where a local authority has an intermediate housing waiting list, they should agree with the housing provider a process for providing priority access for households on the waiting list. This policy requirement currently exists in the AHVLPG for Discount Market Rent and London Living Rent and updates to the AHVLPG will expand this requirement to apply to other intermediate homes.

iii. Supporting London’s key workers

These proposed policy responses outline how the Mayor will support improved provision of housing for key workers in London:

Defining a ‘core’ list of key worker occupations

• The GLA will define and publish a core list of key worker occupations. Local authorities will be encouraged to adopt this core list of key workers and can add to the core list at a local level. This new policy will be outlined in a separate publication detailing the Mayor’s key worker definitions.

• The core list of key workers will be based on the following parameters:

o occupations that are considered essential to the functioning of London in normal times;

o occupations where there is a requirement for an employee to be anchored at their workplace in London to carry out their role; and

o regard to income, with incomes below the income caps defined for intermediate housing within the London Plan.

 

Key worker prioritisation and allocation for intermediate housing

• The GLA will strengthen planning guidance to create the expectation that key workers should be prioritised, with regard to local need, if local authorities and housing providers choose to set additional prioritisation criteria for the first three months of marketing new intermediate homes. This new policy expectation will be included in the updated AHVLPG, to build on the existing policy of the London Plan 2021 H6 and supporting text 4.6.10.

• The GLA expects local authorities and housing providers to use their discretion to consider whether it is appropriate for local key workers to be prioritised on certain sites near a key worker institution, with regard to local need and site-specific circumstances. This new policy will be outlined in a separate publication detailing the site-specific considerations for nominations and allocations of key workers.



iv. Improving data on intermediate housing

These proposed policy responses outline how the Mayor will support improved data collection on intermediate housing in London:

• The GLA will work with the Government to improve the collection of data, via MHCLG’s COntinous REcording of Social Housing Lettings and Sales (CORE) dataset.

• The GLA will work with Government to improve the collection of data on the stock of intermediate homes owned by local authorities and on shared ownership staircasing transactions.

• The GLA will work with investment partners to build on existing data collection processes and identify any opportunities for data sharing to improve understanding in this area.

2.1 Introduction of the policy interventions recommended through the Part 2 CRR will ensure that intermediate housing in London is well-placed to support recovery from the impacts of Covid-19 and meet the housing needs of those Londoners who may not access homes at social rent levels, including key workers. The policy interventions will support the affordability of other affordable home ownership products, such as DMS and First Homes; will ensure that intermediate homes in London are targeted towards those who would most benefit from them; and will promote improved data collection on intermediate housing, which will improve understanding of intermediate housing and aid future policy making.

2.2 The policy interventions recommended through the Part 2 CRR and approved through this decision will strengthen existing guidance set out within the AHVLPG and the Affordable Housing Capital Funding Guide. The policy interventions ensure the Mayor makes best use of his available powers in relation to shaping intermediate housing in London.

3.1 The proposed policy interventions outlined in the Part 2 CRR have been subject to an Equality Impact Assessment (EqIA). A Consolidated Equality Impact Assessment, which brings together the assessment of the Part 1 CRR and Part 2 CRR policy responses, is included at Appendix 3.

3.2 The Mayor’s approach to intermediate housing forms one part of his overall approach to housing in the capital and this assessment should be read in conjunction with the equalities section of the London Housing Strategy: Impact Assessment (LHSIA).

3.3 The LHSIA notes that the balance of affordable housing tenures represents a balance between meeting different forms of need and maximising the overall delivery of affordable homes, within the context of national policy and available funding. It also identifies the mitigations that have been put in place through the Mayor’s wider housing policies against any potential negative impacts of the balance of affordable housing tenures on those who share particular protected characteristics, and relations between those who share characteristics and those who do not. The housing challenges in London that the London Housing Strategy seeks to address and the impacts of that strategy which the LHSIA assesses remain salient and relevant. The proposals put forward through the Part 2 CRR aim to further mitigate against any potential negative impacts of the balance of affordable housing tenures, within the context of national policy and available funding.

3.4 The EqIA undertaken in relation to the policy interventions proposed through the Part 2 CRR highlights that they are designed to support the delivery and improve the affordability of intermediate housing; and to, therefore, benefit Londoners who are most in need of affordable housing, in particular intermediate homes. These interventions should benefit households who may struggle with housing costs due to disadvantage associated with their protected characteristics, who are also identified as being in intermediate housing need. A summary of the assessment of the equality impacts of these interventions is set out in the remainder of this section.

3.5 Improving the affordability of intermediate housing, as well as ensuring eligibility is targeted at the groups most in need of intermediate homes, should help to widen access to intermediate housing for those groups with particular protected characteristics who are more likely to struggle with housing costs. This includes those groups who appear to already be benefitting from intermediate homes, such as younger people and women, as well as those who could potentially benefit in future such as households including someone with a disability and/or households including someone of a BAME or mixed ethnicity background who have a household income of between £30,000 and £90,000.

3.6 Improving the affordability and accessibility of intermediate housing could help to ensure continued demand for these homes, and thereby help to maintain or increase intermediate housing supply. For households which share some particular characteristics and would be unlikely to afford intermediate housing and/or would be more suited to homes at social rent levels, maintaining and potentially increasing intermediate housing supply could indirectly benefit them as it also helps to ensure continued delivery of homes at social rent levels via cross-subsidy. This includes households headed by someone with a BAME or mixed ethnicity background, households including someone with a disability and LGBTQ+ Londoners.

3.7 However, proposals to freeze eligibility income caps at current levels (rather than raise them) may mean that fewer intermediate homes are delivered in more expensive areas of London where the need for intermediate housing is greater. While some households may be able to/want to move to Outer London boroughs to access intermediate housing, some households – particularly those who need to be close to work or family – may be unable to, and therefore may be negatively impacted by lower delivery of intermediate housing in their area. This includes those groups who appear to already be benefitting from intermediate housing such as younger people and women, as well as those who could potentially benefit in future such as households including someone who is disabled, and/or households including someone of a BAME ethnicity background who have a household income of between £30,000 and £90,000.

3.8 Defining a core list of key worker occupations and strengthening planning guidance to enforce the expectation that key workers should be prioritised for intermediate housing could improve the accessibility of these types of homes to those in key worker professions. This could be of particular benefit to women (who are more likely to work in key worker roles than men) and Black and ethnically Indian Londoners (who are more likely to work in key worker roles than White Londoners). Improving the access of those in certain key worker professions to high quality affordable housing is likely to help address the recruitment and retention challenges facing key public services. Having well-resourced public services could indirectly benefit those with protected characteristics who are more likely to experience ill health, be a victim of crime or experience lower educational attainment. This includes LGBTQ+ Londoners, women, older people, disabled people and those from some BAME backgrounds.

3.9 However, prioritising key workers in the allocation of intermediate housing could create negative impacts for those who do not fit the definition of key workers. For instance, most key workers in London are aged between 35 and 60, however those Londoners between the age of 25-34 are most likely to need support to access affordable home ownership products. This could result in younger people having reduced access to intermediate homes.

3.10 The greatest housing need in London is for low cost rented homes. The delivery of intermediate homes may therefore have less of a positive impact on some groups who are disadvantaged due to particular protected characteristics, for whom low cost rent homes would be more appropriate. This is likely to include some households headed by someone with a BAME ethnicity background that, as outlined above, may be less likely to afford intermediate homes than households headed by someone of a White ethnicity background. The balance of affordable housing tenures delivered through the Mayor’s funding programmes represent a balance between meeting different forms of need and maximising the overall delivery of affordable homes, within the context of national policy and available funding.

3.11 The Mayor continues to work to mitigate the negative impact of insufficient funding for low cost rent homes by making the case to government for a step-change in the amount of money available to London to deliver affordable homes, in particular those at social rent levels. In addition, the delivery of intermediate homes, in particular shared ownership homes, is likely to support the delivery of low cost rented homes through cross-subsidy generated within housing developments and across a portfolio of developments brought forward by GLA investment partners.

3.12 The EqIA has informed the development of these proposed policy changes and, as is demonstrated by the EqIA, diligent consideration has been given to the need to need to eliminate discrimination, harassment, victimisation and any other conduct prohibited by the Equality Act 2010; to advance equality of opportunity between persons who share a relevant protected characteristic (race, disability, gender, age, sexual orientation, religion or belief, pregnancy and maternity and gender reassignment) and persons who do not share it; and to foster good relations between persons who share a relevant protected characteristic and persons who do not share it (section 149 of the Equality Act 2010) as set out in the EqIA. The Mayor is referred to the EqIA attached at Appendix 3.

a) Key risks and issues

4.1 Risk: The policy changes are not effective in supporting the affordability of intermediate housing, as a result of the Mayor’s limited powers in this area, and, therefore, do not enable the GLA to better meet the housing needs of those Londoners who are unlikely to access homes at social rent levels and do not enable intermediate housing in London to be well-placed to support recovery from the impacts of Covid-19.

4.2 Mitigation: In developing these policy interventions the GLA has carefully considered the results of the intermediate housing consultation and worked to identify the most effective and practical approaches to ensure that intermediate housing meets the needs of Londoners. This is in the context of the Mayor having limited powers in this area. The policy interventions recommended through the Part 2 CRR will be implemented through the revised AHVLPG and through updates to the GLA’s Capital Funding Guide, making best use of the Mayor’s planning and investment powers.

4.3 Risk: The policy changes are not effective in targeting intermediate homes to those who would most benefit from them, as a result of the Mayor’s limited powers in this area, and, therefore, do not support the provision of key worker housing.

4.4 Mitigation: In developing these policy interventions the GLA has carefully considered the results of the intermediate housing consultation, including responses that highlighted concerns around the additional resource required for local authorities to administer and maintain an intermediate housing waiting list and/or allocations policy that incorporates key workers; and the desire of some local authorities to have autonomy over the decision of how to implement such a list. The policy interventions recommended through the Part 2 CRR will utilise the Mayor’s strategic planning powers to promote key worker prioritisation and support the delivery of homes for key workers, whilst maintaining flexibility for local authorities to respond to local need.

b) Links to Mayoral strategies and priorities

4.5 The Mayor’s London Housing Strategy sets out policies to increase London’s housing supply, in particular genuinely affordable homes. Policies 4.1 B and C focus on the Mayor’s work to ensure that intermediate homes are genuinely affordable to Londoners, in particular through the delivery of London Living Rent and supporting shared ownership homes which have a focus on ensuring the affordability of service charges.

4.6 Inclusive London, the Mayor’s Equality Diversity and Inclusion Strategy, sets out an aspiration to ensure all Londoners have a good quality home at a price they can afford. The strategy recognises that increasing the supply of genuinely affordable homes will help those particularly affected by London’s housing crisis; and recognises the need to better protect Londoners living in social housing. Implementing housing and planning policies to protect the affordability of housing in London, and to ensure an equitable process of allocating homes for Londoners, is a significant tool that the Mayor has to support Londoners in housing need.

4.7 This Mayoral Decision should be read in conjunction with MD2706 which approved the implementation of a number of policy interventions through the new AHP. In addition, this Mayoral Decision should be read in conjunction with MD2707 which approved the receipt of a £4bn funding settlement from Government to be allocated through the Affordable Homes Programme 2021-2026. In return, the Mayor must commit to supporting the delivery of a total of 82,000 homes (including through the Affordable Homes Programme 2016-2023) by March 2026. Government requires that 47% of these homes should be for affordable home ownership.

c) Impact assessments, consultations and conflict of interest

4.8 This decision approves policy changes as the result of a consultation process, as outlined at paragraph 1.2 above.

4.9 The proposed policy interventions outlined in the Part 2 Consultation Response Report have been subject to an Equality Impact Assessment (Appendix 3).

4.10 There are no conflicts of interest to note from any of the officers involved in the drafting or clearance of this decision form.

5.1 This decision requests approval for the introduction of policy interventions to ensure that intermediate housing in London is well placed to support recovery from the impacts of Covid-19.

5.2 There are no direct financial implications on the GLA from these policy interventions.

6.1 Section 30 of the Greater London Authority Act 1999 (as amended) (“GLA Act”) gives the Mayor a general power to do anything which he considers will further one or more of the principal purposes of the GLA. The principal purposes, as set out in section 30(2), are: (a) promoting economic development and wealth creation in Greater London; (b) promoting social development in Greater London; and (c) promoting the improvement of the environment in Greater London.

6.2 Given the above, the GLA’s housing and regeneration functions contained in Part 7A of the GLA Act and section 34 of that Act, which allows the Mayor to do anything which is calculated to facilitate, or is conducive or incidental to, the exercise of any of his functions (including his functions under section 30), and section 333A(3)(b), (4) and (10), the GLA is empowered to introduce the policy interventions set out in this report.

6.3 In determining whether or how to exercise the power conferred by section 30(1) of the GLA Act, the Mayor must:

(i) have regard to the effect that these decisions will have on the health of persons in Greater London, health inequalities between persons living in Greater London, the achievement of sustainable development in the United Kingdom and climate change and its consequences (sections 30(3-5) of the GLA Act; and

(ii) pay due regard to the principle that there should be equality of opportunity for all people (section 33 of the GLA Act).

6.4 In taking the decisions requested, the Mayor must also have due regard to the Public Sector Equality Duty; namely the need to eliminate discrimination, harassment, victimisation and any other conduct prohibited by the Equality Act 2010, and to advance equality of opportunity and foster good relations between persons who share a relevant protected characteristic (race, disability, gender, age, sexual orientation, religion or belief, pregnancy and maternity and gender reassignment) and persons who do not (section 149 of the Equality Act 2010). These matters will also need to be taken into account when preparing the proposed revisions to the Affordable Housing and Viability London Plan Guidance (AHVLPG) and the GLA’s Affordable Housing Capital Funding Guide. Prior to any such guidance being issued, consideration should be given to whether or not any impacts that might disproportionately affect any Protected Groups are justified and proportionate.

6.5 In respect of paragraphs 6.3 and 6.4, the Mayor should have regard to section 3 above, and regard to the EqIA attached at Appendix 3.

6.6 In addition to the above, where the Mayor is proposing to use the power conferred in section 30(1) of the GLA Act, the Mayor must consider consulting in accordance with section 32 of the GLA Act (see paragraph 4.8 above). The Mayor will need to consult in accordance with section 32 of the GLA Act, as appropriate, prior to entering into any funding agreements for the new AHP.

6.7 Further legal comments in respect of the Homes for Londoners: Affordable Homes Programme 2021-26 are set out in MD2707.

7.1 The policy interventions approved by this decision relate to the consultation questions relevant to the Intermediate Housing: Part 2 Consultation Response and the majority will be implemented through the Mayor’s planning and investment powers, including through the Affordable Housing and Viability London Plan Guidance and the GLA’s revised Affordable Housing Capital Funding Guide.

7.2 The AHVLPG will reflect the policy interventions outlined in the Part 2 CRR and is expected to be published for consultation later in 2021, subject to Mayoral approval.

7.3 The GLA’s Affordable Housing Capital Funding Guide contains the rules and procedures for investment partners providing housing with funding from the GLA. The work to update the Capital Funding Guide is ongoing with publication anticipated in the coming months.

7.4 A separate publication will detail the Mayor’s key worker definitions and site-specific considerations for nominations and allocations. The work to prepare this will commence in June 2021.