London mayor calls for £2.2bn housebuilding stimulus as affordable starts fall 90%

A spokesperson for the mayor said: “In contrast to the lack of housebuilding outside London, Sadiq has hit every Affordable Homes Programme target he has been set and is confident he will continue to do so.

“Despite a welcome doubling of affordable housing completions last year compared to when Sadiq was elected, these latest figures underline the major challenges currently facing the sector.

“Levels of government investment are nowhere near enough, and there’s been a perfect storm of much higher prices for materials and a spike in interest rates.”

In London, 10,949 affordable homes were completed in 2023-24, down 22% from the 13,954 completed in 2022-23.

Of the 10,949 completions, 4,653 were for social rent, 3,630 were for shared ownership, 1,366 were for affordable rent, 865 were ‘other intermediate’ and 435 were for London Living Rent.

The GLA pointed to the 10,949 affordable completions for 2023-24, saying it was more than double the number of Boris Johnson’s final year as mayor of London, when 4,881 GLA-backed affordable homes were completed.

It also argued that funding for starts under London’s 2021-26 Affordable Homes Programme was not finalised by ministers until July 2023, which only enabled the first starts on site in the third quarter of 2023-24.

In response, a Department for Levelling Up, Housing and Communities spokesperson said: “These claims are misleading. We have allocated £4bn to the Greater London Authority to deliver affordable housing in London, part of our wider £11.5bn Affordable Homes Programme, and last year saw the highest year on record for affordable housing delivery across the country, with a 12% increase in starts compared to the previous year.

“As the secretary of state has made clear, Londoners are being let down by the mayor’s failure to deliver new homes in the capital. That is why government has taken the unusual step of intervening in the London Plan to boost housing delivery.”

Mr Khan has launched a £100m fund to prompt housebuilding in the capital early in his third term, but pointed out that it was not enough.

He said: “National housebuilding is set to fall to around half the level ministers have promised, but they have yet to act when it comes to the urgent need for public investment to kick-start a stalling market. Just as national housebuilding loses momentum, they’ve still got their foot on the brakes, rather than stamping hard on the accelerator.”

The Affordable Homes Programme (AHP) in London runs from 2021-26 and is worth £4bn, to build at least 23,900 homes.

The 2021-26 AHP outside of the capital has experienced some turbulence. It was expected to deliver 180,000 homes, but the National Audit Office had revised this estimate down to 157,000 by September 2022. With the high inflation that followed since, total completions are now likely to be far lower.

House builders across the country have faced a storm of rising costs as a result of an inflation spike and high interest rates.

Savills has warned that housing completions could fall to just 160,000 next year across the entire country and said more affordable housing was critically important.

In February, housing associations raised the alarm about the effect on building in the capital and across the country, and wrote to Michael Gove, the housing secretary, to ask him to act.

The mayor’s £100m Housing Kickstart Fund will target stalled developments across the capital, focusing on switching market sale homes in stalled developments to social housing.

Fiona Fletcher-Smith, chair of the G15 group of London’s largest housing associations, said: “More than 175,000 Londoners are homeless and living in temporary accommodation – equivalent to one in 50 residents of the capital. This figure also includes 85,000 children – one child in every London classroom. London boroughs are now spending £90m a month on temporary accommodation, pushing some to the brink of bankruptcy.

“With a crisis of this magnitude, we need more housing of all types, but the most acute need is for affordable, preferably social, housing.”