Sajid Javid faces battle over 4% affordable homes in Sainsbury's scheme

The housing secretary, Sajid Javid, is facing a legal challenge after he approved a 700-home housing scheme by the supermarket chain Sainsbury’s, which includes just 4% affordable housing.

The 29-storey development in Ilford, east London, will be built in a borough that has a stated policy that 50% of all new homes should be affordable. It estimates it needs an extra 15,000 affordable homes in the next 15 years, but Javid backed a scheme with just 27 affordable homes. The rest are expected to be sold for about £400,000 for a two bedroom flat.

The London mayor, Sadiq Khan, branded the approval “outrageous” and said 4% was a “disgraceful” contribution. Labour’s shadow housing secretary, John Healey, said it was “a clear case of ministers backing private developer profit over the homes that local people need”.

A local residents group Ilford Noise is now preparing to request a judicial review of the decision after Javid accepted Sainsbury’s claim that the scheme would not be viable with any more affordable units. Javid’s report concluded: “There is no good reason to dispute the agreed conclusions of the financial experts.”

The decision came just weeks after Javid gave a speech insisting it is “totally unacceptable” for developers to claim they cannot afford to meet affordable housing promises.

He said: “It cheats communities of much-needed housing and infrastructure and gives new development a bad name.”

But in this case, where Sainsbury’s never promised more than 4%, he has allowed the developer to hugely undershoot the local target.

Across England, the number of affordable homes delivered by the so-called section 106 agreements with developers halved from 32,000 in 2008-09 to 16,000 in 2015-16, according to analysis by Oxford Brookes University.

“If we can’t build affordable housing in outer London where can we build it?” said Meenakshi Sharma, a co-founder of Ilford Noise, which has branded the amount of affordable housing in the Sainsbury’s scheme “ridiculous and insulting”. “It is the poorest people who are getting the shortest end of the stick.”

Sharma said the government had prioritised meeting total housing targets rather than seeking to meet the chronic shortage of affordable homes. Javid’s decision notice points out that the Sainsbury’s development would represent 60% of one year’s target for the whole of the borough.

The London Borough of Redbridge, which had originally rejected the scheme before switching to support, branded the ruling good news for residents who “are set to benefit from more affordable housing”. It suggested that a clause which states that “if viability were to improve, the affordable housing offer would improve proportionately” and could lead to more cheaper homes than the 4%.

But Khan said: “The government’s decision shows just how out of touch they are with the needs of Londoners. Ministers are merely paying lip service to tackling the housing crisis as evidenced in this outrageous decision. Both City Hall and the local council recognised the amount of affordable housing on offer was simply unacceptable – and government decisions like this are not in the best interests of the capital.”

A Sainsbury’s spokesperson said: “We’re pleased with the outcome of the appeal as our plans will support Ilford’s regeneration by driving growth, creating new jobs and providing a broad mix of housing for the community.”

The Ministry of Housing Communities and Local Government is yet to comment.