Affordable housing quota for London falls to 20%

The government and the mayor of London have agreed to change the quota for the amount of affordable housing for new developments in London from 35% to 20%.

City Hall said the measures were introduced to help speed up planning decisions, incentivise developers and build more houses.

Developers are promised a fast-tracked application if they agree to build 20% of affordable housing in their plans.

As part of the announcement, the mayor has also been given more planning powers and funding.
City Hall will be able to intervene in planning applications that contain more than 50 homes and were previously rejected by borough councils.

It is already allowed to step in on decisions for developments over 150 homes.

A further £322m City Hall Developer Investment Fund has been created to encourage developers.

Back in 2016, the Mayor of London Sir Sadiq Khan said that London needs to build about 66,000 new homes per year to meet demand, with more than 50% of those should be affordable.

In 2017, he doubled down to introduce a fast-track route for major developments if they provided at least 35% affordable housing.

The Home Builders Federation reported that only 30,000 residential properties last year were built, with the government expecting 88,000 from the capital per year to meet the city’s housing needs.

In 2022-2023, there were 25,000 affordable homes built and last year just under 4,000 were built, according to City Hall figures.

The mayor said: “Homes being built in London have dried up and it’s a nationwide problem.

“I’m not willing to stand by when that happens and so working with the government we’ve announced today a temporary short-term package of emergency measures to kickstart house building in London, which means more affordable homes that Londoners desperately need.”

In a release, City Hall said that the scale of the housing crisis in recent years means “emergency action is needed to get building moving”.

The government said that a “perfect storm due to a combination of spiralling construction costs, high interest rates, the legacy of the previous government, impact of the Covid-19 pandemic, regulatory blockers and wider economic conditions,” had created an urgent need for more housing.

‘Embarrassing climb down’

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 1.5m 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.”

Reed announced plans in September to build three new towns to fulfil its target of building 1.5m homes by 2029.
Conservative Andrew Boff, chair of the planning and regeneration committee for the London Assembly, condemned the mayor for not lowering the targets sooner.

He said: “We’ve been telling him since 2016 that these artificially high targets will get in the way of building the homes that Londoners need and it’s a bit of an embarrassing climb down for him.

“We need to build more homes in London and for as long as we have these artificial targets, we aren’t going to get the homes that Londoners need.

“He’s still got a huge amount of money, which he can use for housing.

“Once the homes are built, he can apply those vast amount of funds that he has in order to increase the amount of affordable homes.

“But if you’re not building the homes, you can’t make them affordable.”

Zoë Garbett, Green Party London Assembly Member said: “Lowering these targets will not solve our housing emergency.

“It will only serve to protect the profits of the same developers who got us into this mess, while driving up prices and slashing the delivery of desperately needed social homes.

“The mayor talks a big game about wanting to build more affordable housing, but if he truly means it, he must start loudly demanding more government funding to build the next generation of social homes.”

‘Betrayal’

Suzanne Muna from Social Housing Action Campaign SHAC (SHAC), said: “The idea that the solution to the housing crisis is to reduce the number of sub-market homes is nonsense.

“It’s a betrayal of the Labour government and mayor’s commitment to address homelessness. It’s not going to reduce homelessness.”

On reducing the 35% expectation on new developments, she said: “I don’t think that that’s going to be something that is going to win much support from people in London.

“When you talk to people about how they’re managing and what their biggest costs are, housing is their biggest cost, it’s taking up around 40% of people’s salaries.

“This is an increasing trend that it takes up an ever larger portion of your salary. And incomes aren’t growing by the same amount that housing costs are growing.”

Councillor Grace Williams, London Councils’ member for housing and regeneration, said: “These announcements from the government and mayor represent a significant change in approach.

“Boroughs will now be looking at the proposed changes in detail to understand the implications for housing delivery in our local areas.

“Ultimately, with boroughs having already granted planning permission for almost 300,000 homes in London that are yet to be built, we need to ensure housebuilders deliver on their commitments so that we can collectively tackle the housing crisis facing the capital.”