Mayor of London Boris Johnson has today announced a £5 billion investment plan to support the capital's housing market over the next three years.

The Housing Strategy aims to boost the construction sector in London during the economic downturn, support the industry to deliver new affordable homes, and provide more sustainable routes to home ownership.

The strategy includes a range of innovative ideas that will replace outdated policies, which no longer apply to the current housing market and economic climate in London. It represents a fresh approach, embracing new opportunities provided by the Homes and Communities Agency London Board, which will be chaired by the Mayor. The draft strategy will see the Mayor working closely with the Homes and Communities Agency (HCA), investing nearly £2 billion every year from the London housing budget to deliver new homes and improve existing homes.

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In a break from conventional thinking, investment will be directed into new ways of delivering homes to tackle the credit crunch. Funding will be used to kick-start stalled developments in London, to acquire unsold market homes for affordable housing and to bring forward public sector land for new development. In addition funding will be used to develop subsidised rent and rent-to-buy schemes, which could be sold at a profit or turned into permanent affordable homes when the upturn arrives.

The Mayor also wants to cut the numbers of people living in temporary accommodation by delivering thousands of new homes for social rent and introducing more flexible schemes for social tenants who aspire to own their home or want to move elsewhere in the capital. The strategy will initiate a big increase in the number of family sized homes available to rent and to buy, and aims to double the number of accredited landlords in the private sector to protect rights for tenants.

Mr Johnson said: "The strategy focuses not only on the issues facing the housing market in these difficult times but the historic problems of affordability, homelessness and overcrowding. It is designed to meet the needs of Londoners aspiring to get a foot on the housing ladder. For far too long London's finest have been priced out of the capital's housing market and, as a result, forced out of town with the capital losing their skills and expertise.

"These plans aim to put London on a strong footing for the eventual upturn in the housing market. By enabling ordinary Londoners to move from being subsidisers to being investors in new homes, we will provide timely support to a struggling development sector and can expect a return on our investment in years to come."

(CD/JM)