Huge London affordable home shake-up will save taxpayers billions, report finds

12 March 2024 , 00:01

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London Mayor Sadiq Khan's housing plan could save over £2billion, economists found (Image: Julian Hamilton/Daily Mirror)

A London housing shake-up could save councils £1.5billion by letting them buy affordable homes, economists believe.

A new report published today says Mayor Sadiq Khan's plan to let local authorities buy 10,000 affordable homes could save a fortune in temporary accommodation costs. An assessment by the New Economics Foundation (NEF) said central Government would also save around £780million.

Mr Khan launched his Council Homes Acquisition Programme (CHAP) last November aiming to make more affordable housing available. Over 20 years, the NEF estimates it could save taxpayers over £2.2billion.

He called on the Government to back the scheme, which would enables councils to buy properties and convert them into social rented housing or temporary accommodation for the homeless.

The NEF report states: "It is good value for money for taxpayers, easing the rising financial burden homelessness is placing on London’s councils, reducing housing benefit costs for taxpayers and generating significant indirect, additional savings for government.

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"It also allows local authorities to generate rental income, all while ensuring the most vulnerable tenants receive better quality TA and allowing more homeless families to move into their own permanent homes."

The NEF estimates the scheme will trim housing benefit subsidies by £340million and generate an additional £440million in savings to central Government.

Mr Khan said: “With homelessness on the rise and housebuilding on the decline nationally, today’s report shows the vital importance of my Council Homes Acquisition Programme to solving the capital’s housing crisis. By converting private housing into 10,000 new council homes, not only will councils save £1.5bn in temporary accommodation costs – significantly easing the constraints on council finances – but central Government spending will also be slashed by a staggering £780m over the next two decades.

"This programme works, and Government should back me to deliver it in full." He added that it would help "deliver the investment that is needed to get housebuilding in the capital back on track".

Dave Burke