The adjustment to the payment method under the programme has been made to address concerns over slippage in the delivery of homes under the programme. The GLA hopes that by giving developers 75% of the funding up front when building work starts on site, they will be incentivised to maintain the level of starts forecasted for this year, it said.
Under the plans, developers must give evidence that work has started on site before any payment will be made. The remaining 25% of the grant payment would be made on completion of the scheme.
It is hoped that by bringing 75% of the funding forward, the risk of under-delivery will be reduced in the remaining three years of the programme, through early delivery of completions linked to starts achieved this year.
The decision has also been made to ensure that London is not disadvantaged by the Homes and Community Agency's decision to pay 50% for starts on site for the remainder of this programme on AHP schemes outside London, the GLA said.
The Affordable Homes Programme is expected to deliver over 23,000 affordable homes in London through the allocation of £627.6 million of grant to 60 investment partners. The programme is in the second year of delivery and will complete in March 2015.
The cost to the GLA in terms of lost revenue from interest foregone on the expenditure brought forward is estimated to be between £3m and £3.5m and will be managed from within the existing Housing and Land budget , the GLA said. If necessary, additional capital receipts arising from land sales will be used.
