London’s Mayor Sadiq Khan’s affordable housing production has been dealt a monumental blow, slashing his plan by over 6,000 homes. London’s new delivery target for affordable homes has almost halved. It is now between 17,800 and 19,000, a 22% cut from earlier estimates. This change comes during a particularly bleak economic climate that has devastated the housing stock citywide.
Deputy Mayor for Housing Tom Copley justified the move to reduce the target. He stated that this decision is indicative of the hard choices London is having to make right now. He emphasized that the administration was “taking the hard decisions to improve housing supply of all tenures.” Copley points to a few major pieces that led to this decrease. In large part, high interest rates, skyrocketing building costs and the long shadow of Brexit were to blame.
Now new data shows a dramatic drop in affordable housing construction going on right now in London. At least one report in November claimed the number of affordable homes started had plummeted by 88%. Only 3,156 affordable housing schemes began in the whole of Greater London between April 2023 and March 2024. This figure presents a striking juxtaposition against the 26,386 projects that got started in all of last year. This sharp decline underscores the challenges developers are facing. They’re doing this work in a city frequently tagged as the most expensive city in the world to build.
Copley was quick to point out the challenges of London’s building environment. Even true, since he pointed out new builds tend to be denser and taller, making building costs per unit higher. Additionally, he pointed out that government regulations intended to enhance building safety have inadvertently made it harder and more expensive to construct new homes.
This week, the Greater London Authority (GLA) admitted that they too have had to make substantial amendments to their Affordable Homes Programme. These changes will allow them to address the unprecedented conditions now affecting London. The GLA aims to ensure the delivery of more housing schemes and maximize the number of affordable and social homes within the 2021-2026 program.
“To adjust London’s target for the Affordable Homes Programme for 2021-2026 from the previous range of 23,900 to 27,100 starts responds to the difficult conditions London currently faces and will allow the GLA to ensure the delivery of more schemes and complete the maximum number of affordable and social homes in the 2021-2026 programme.” – GLA
This cut in the targets for affordable housing is part of a wider trend hitting all large, urban developments in London. Even as housing supply remains stymied by high costs and regulatory challenges, city officials are realizing they’ll need to rethink their strategies to increase housing supply.
