Modular construction developer, Pocket Living, will receive investment to create over 1,000 new homes.
The funding – all of which will be paid back in full by the end of the next decade – will help finance ongoing site purchases for development.
It will enable Pocket to increase its rate of delivery of high-density flats on small brownfield sites to provide more new and genuinely affordable homes for Londoners. Pocket will also look to use off-site construction where appropriate to speed up delivery.
Pocket Living, who can build 32 flats in 10 days, will assemble one- and two-bed flats for first-time buyers, which it sells at 20% below the market rate.
The flats are entirely assembled off-site; the electrical wiring, appliances, and windows are all fitted in a factory. The assembled homes are then transported into the capital and craned into place at the building site.
However, the homes are highly over-subscribed, with around 10 applicants for every home on offer.
Khan said: “The housing crisis is the biggest challenge facing Londoners today and I have been honest from the start that we won’t be able to turn things around overnight.
“For decades, we have simply not built enough new and affordable homes in the capital, meaning that for too many Londoners the dream of buying their own home is getting further out of reach.”
Homes and Communities Agency chief executive, Nick Walkley, said: “This deal is an important contribution to much-needed affordable housing in London.
“By lending £33.5m from the government’s Home Building Fund, the Homes and Communities Agency is helping to unlock the construction of new homes, giving first-time buyers in London a real chance to get their foot on the housing ladder.”
The investment will be used alongside £33.5m of funding from the Homes and Communities Agency to build homes on the first set of sites to come forward.