The contract will be undertaken by developer Pocket Living, which typically builds one or two-bed flats off-site to specification in a factory, then drops them in place using a crane on site in the capital.
The project will see 153 homes built in Addiscombe Grove in Croydon. More than 70% of the completed homes will be sold to FTBs at a discount from market price, available with 5% deposit to households with a salary of £39,000.
Pocket Living has agreed in principle to make the remaining homes available for shared ownership.
The homes will also be sold exclusively to residents and workers in the borough.
This latest deal comes after Pocket Living received £25m of City Hall funding last year to build 1,059 homes by 2021, with a third expected to be built off-site in a factory.
The Greater London Authority (GLA) also loaned Pocket Living £26m in 2013, bringing total investment by the GLA in the developer to £51.4m.
The mayor said that the off-site approach allows for faster construction on site and has the potential to increase capacity in the industry.
“Tackling London’s housing crisis requires bold new approaches. We know turning things round will take time, but off-site construction is an innovative way to speed up building the affordable homes our city needs,” said Sadiq Khan.
“I invested in Pocket Living to help them build genuinely affordable homes that are sold to local people first,” Khan added.
Marc Vlessing, chief executive officer of Pocket Living, said: “We’re delighted that the Mayor has approved our exciting first scheme in Croydon. At Pocket, we always aspire to lead the way. Addiscombe Grove is a great example of this, where we are aiming to use modular construction to deliver homes faster and increase the genuinely affordable housing provided from 73% to 100%.”
Vlessing continued: “Once again, the Mayor has shown his commitment to tackling the housing crisis through backing innovative solutions that deliver significant levels of affordable homes. We are proud to share City Hall’s vision for housing in the capital.”
The video below shows how Pocket Living assembles its houses: