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

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.

Johnson, who will chair the Homes and Communities Agency London Board, said the strategy includes a range of ideas that ‘will replace outdated policies, which no longer apply to the current housing market and economic climate in London’.

The draft strategy will see the Mayor working closely with the Homes and Communities Agency, investing nearly £2bn every year from the London housing budget to deliver new homes and improve existing homes.

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.

Through the strategy’s ‘First Steps’ programme, the Mayor wants to increase the opportunity for home ownership in London by raising the household income limit to £72,000 for low cost ownership schemes and by simplifying access to them. This would enable any household earning at the basic rate of income tax to qualify and move away from eligibility based on employment categories.

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. He said 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.

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.’

The British Property Federation welcomed the m £5bn investment package. Director for residential policy, Ian Fletcher, said: ‘Some will scoff at the Mayor sticking to the target of delivering 50,000 affordable homes in the current economic climate. It will be challenging, but the alternative does not bear contemplating.

'The new strategy is slimmer, but fitter for the current economic conditions. The Mayor has rightly focused on a few key priorities, where the greatest difference can be made. '

But the Labour group on the London Assembly said the Mayor had 'missed the point' .

Nicky Gavron, assembly member and former deputy mayor said: 'The government has given Boris billions to boost London's housing market - it is crucial he gets this right. The impact of the credit crunch on every aspect of the housing sector cannot be underestimated - yet the demand for housing, particularly affordable rented housing - has never been higher. Over a third of a million Londoners are waiting for social housing yet the Mayor's housing adviser has made it clear they will not impose any target for rented homes on London councils.

'Without political leadership and direction from the Mayor, the record of many London councils in office shows that they will simply fail to deliver affordable housing for their residents. Barnet has almost 18,000 people waiting for an affordable home to rent, yet last year delivered just 10 units. Wandsworth has almost 9,000 people waiting yet delivered just 20 new homes. This is their record and it is just pitiful. If anything the Mayor is giving boroughs like Barnet and Wandsworth even less incentive to deliver.'