A raft of emergency measures has been announced in a bid to boost housebuilding in London.
The housing secretary and mayor of London have agreed to the measures as housebuilding has ground to a halt in the Capital, with over a third of boroughs saw no new home construction starts in the first quarter of 2025.
The plans will aim to make more sites viable and incentivise developers by fast-tracking the planning process for sites with a minimum of 20% affordable housing, reduced from 35%.
Targeted measures will tackle squeezed viability, including the removal of design guidance that constrains density and temporary relief from development levies for schemes able to start promptly and guarantee affordable homes for Londoners.
The mayor will also be handed new powers to call in schemes of 50 homes and above where boroughs are minded to refuse, while City Hall can also make decisions on developments of 1,000 sq m or more on the green belt.
As well as this, the government is looking at investing an initial £322million to set up a City Hall Developer Investment Fund, which the mayor will be able to use to further increase housebuilding.
Housing secretary, Steve Reed, said: “Getting spades in the ground in London is crucial if we want to see the biggest increase in social and affordable housing and meet our target of delivering 1.5 million homes in our Plan for Change.”
“I have worked closely with the Mayor of London to give the Capital the shot-in-the-arm it needs to ensure more Londoners have an affordable home of their own.”
The Mayor of London, Sadiq Khan, said: “Affordable housing has always been a top priority for me as mayor. We have started more new council homes in London than at any time since the 1970s and, prior to the pandemic, completed more new homes in London than any time since the 1930s. But there’s now a perfect storm facing housebuilding in London due to a combination of high interest rates, the rising cost of construction materials, the impact of the pandemic and ongoing consequences of Brexit. All of this means we are now in the midst of the most difficult period for housebuilding since the global financial crash.”
“Urgent action is required, which is why I’ve been working with the government on this package of bold measures. I grew up in a council house, so I know the importance of social and affordable homes. I’m not willing to stand by while the supply of affordable housing for Londoners dries up.”
“With these significant new powers and the initial £322million of funding from the government – plus the short-term emergency action to get more investment flowing into affordable housing – I’m confident that we can kick-start housebuilding and deliver more of the affordable homes Londoners badly need.”
“I will always do everything I can to accelerate the delivery of genuinely affordable homes as we continue to build a better, fairer London for everyone.”
The measures follow on from the announcement that the Building Safety Regulator will speed up decision-making relating to building control applications for high-rise buildings and clear the backlog of legacy applications by the end of the year. The majority of applications for high-rise homes going through the newly established Innovation Unit are now currently meeting or bettering the 12-week average target.
Rico Wojtulewicz, head of policy and market insight at the NFB, commented: “The government were handed a poison chalice when it came to the supply of new build homes. Build costs spiralled due to poorly assessed planning policies and regulations. The Building Safety Regulator has exacerbated this with its massive backlog. Mortgage rates remain a challenge for buyers, many of which are waiting to see if they come down.”
“Today’s announcements are welcomed, and it shows the government is serious about new housing. There remains so much to unpick about housing viability and affordability. To reach the 1.5 million home target the government must start reducing the cost of building further. This means removing disproportionate costs like affordable housing and for the public sector to instead focus on social housing and infrastructure delivery at scale.”
Paul Rickard, chief executive of Pocket Living, said: “The range of measures, including the reduction in the affordable housing threshold which we have been advocating for, is a sensible and welcome short-term move that should unlock thousands of new schemes across London and help restore confidence in the market. This helps to kick-start delivery and allows us to look to longer-term structural reform, including a rethink of the wider approach to viability in London.”
“There are currently 281,000 unbuilt homes with planning permission, many of which will require further intervention. Unlocking as many schemes as possible offers the fastest route towards the Government’s 1.5 million homes target and we expect policy makers to continue to work with the sector to find innovative and fair ways to extend these interventions to consented schemes. That means encouraging local authorities to work pragmatically with developers on projects that are currently tied up in unviable consents.”
Simon Cox, managing director at Walter Cooper, commented: “London’s housing market is in a dire state, with external factors such as skyrocketing material costs and the Building Safety Regulator wreaking havoc on developers. Government intervention has come at the right time, and the measures announced put development in a strong place, with the time-limited emergency relief from the CIL and a reduction in affordable housing targets working to boost viability.”
“Our housing crisis is fundamentally down to a lack of development, so while on the surface a reduced target of 20% may appear to dilute social housing stock, actually I suspect we’ll see figures increase as more developments are brought forward. 20% of a £1 is better than 50% of nothing, which is what we were facing prior to these measures.”
“This is a Londoncentric announcement, however, if proven successful then there is no reason why this shouldn’t be used as a blueprint for delivering housing quicker across other regional cities struggling to progress build programmes.”
