On a visit to the new Sugar Hill housing development in Harlem, New York City, Sadiq Khan today set out the first details of his plans for ‘London Living Rent’ – a new type of tenancy for newly-built affordable homes that will help average earners in the capital save for a deposit by offering them a below-market rent.

London Living Rent homes will have rents based on a third of average household incomes in each borough. New homes will be offered to low and middle-income households, typically earning between £35,000 and £45,000, who are currently renting privately. Across London, this would see the rent for a two-bed flat drop below £1,000 – compared to average private rents of £1,450.

Further details of the new programme will be released in the coming months, but the Mayor has already begun working with housing associations and boroughs to kick start the delivery of new homes at these rent levels through their building programmes. The new Mayor of Hackney, Phil Glanville, elected last week, has made a manifesto pledge that Hackney will be the first borough to build 500 homes for London Living Rent.

As he set out the first details of his London Living Rent scheme, the Mayor also signalled his intention to protect London’s stock of social housing for those on low incomes. He has pledged to work with housing associations to put an end to so-called “rent conversions”, whereby existing social housing is re-let at higher rents. The previous Mayor, Boris Johnson, encouraged these rent hikes for over 19,000 social rented properties, where rents rose by up to £5,500 per year, often pushing up the housing benefit bill.

Sadiq Khan said: "We know that fixing London’s housing crisis won’t happen overnight, and we need to do everything we can to help Londoners who are struggling to pay their rents. That’s why I’m working with housing associations and councils to build new homes for ‘London Living Rent’ – homes that will offer hard-working, low and middle-income families an alternative to renting privately so they can get by and save for a deposit.”

David Montague, Chief Executive of L&Q and the Chair of the G15 of London’s biggest housing associations, said: “The G15 is committed to working with the Mayor to make London a more affordable place to live. We want to provide new homes in a way which doesn’t involve setting rents beyond the reach of ordinary Londoners.

“This can be achieved as part of a mainstream grant-funded affordable housing and regeneration programme in which housing associations retain flexibility over rents and asset management. A new agreement could include a move away from rent conversions on existing social rented homes where we agree that these homes are fit for purpose.”

The newly-elected Mayor of Hackney, Philip Glanville, said: “Hackney is already building more social housing than anywhere else in the capital, but it’s also vital that there are more homes which Londoners on middle-incomes can afford to rent and buy.

“The London Living Rent will help people who work hard but are getting priced out of our city, which is why I’m proud that my first act as Mayor is to pledge that Hackney will be the first borough to see 500 homes built at this affordable level.

“We must make sure that all the people who make London the world’s greatest city, whatever their background, can afford to live here and take advantage of its opportunities, so I’m delighted to be working with Sadiq Khan to help make that happen.”

The Mayor is on a five-day business trip to Montreal, Chicago and New York to spread his message to the US and Canada that London is open for business and a key destination for investment and tourism.