London Experiences 88% Drop in New Affordable Housing Starts

Recent statistics indicate an 88 percent decrease in the initiation of affordable homes in London. Government data shows that 3,156 affordable housing projects commenced across Greater London from April 2023 to March of this year, a substantial drop from the 26,386 starts recorded in the preceding 12-month period. The data further illustrates that the council areas of Harrow, Bexley, and Richmond-upon-Thames, along with the City of London, each initiated only a single new affordable property. A government spokesman stated that modifications to the planning system, coupled with enhanced funding and the mandatory implementation of local housing targets, are expected to ameliorate the current situation. The classification of affordable housing encompasses a broad spectrum of properties, including those available for rent at up to 80% of local market rates, shared ownership residences, and social rent properties typically priced at approximately 50% of market levels. The 88% decline in affordable home starts in London during the last financial year contrasts with a 39% decrease observed across England as a whole. According to the data, only two projects began in Kensington and Chelsea, and three each in Brent, Enfield, and Lambeth. For the 2023/24 period, the London boroughs with the highest number of affordable home initiations were Barking and Dagenham (584 starts, a reduction from 1,021 in the prior year), Greenwich (406, down from 2,615), and Redbridge (351, a decrease from 575). A spokeswoman for London Councils, the local government association for the capital, noted that despite London initiating more council-built homes in 2022 than in any year since the 1970s, the market conditions for commencing new housing construction are “currently incredibly tough”. She added, “There are 287,000 potential new homes in London with planning permission, including 70,000 affordable homes, that have yet to be built.” She elaborated on the challenges, stating: “There are a lot of barriers to unlocking these sites – such as skyrocketing construction costs, and in recent years, a lack of capital funding and infrastructure.“On top of this, London’s higher land values mean that current grant levels are insufficient to secure the viability of schemes. “Many boroughs can’t make up the shortfall – across London there’s a cumulative £700m funding gap in social housing budgets.”” Chancellor Rachel Reeves, in her recent Budget, declared a £500m “top up” for the previous Conservative government’s £11.5bn England-wide Affordable Homes Programme. London received an allocation of £100m from this additional £500m, increasing the capital’s total share to £4.1bn. Rob Anderson, research director at the Centre for London think tank, commented: “While policy change such as planning reform to unlock areas on the ‘grey’ belt or incentivise housebuilding on brownfield land is a step in the right direction, it will not be enough to turn the corner on this crisis.“The £500m uplift announced in the recent Budget was welcome, [but] the evidence suggests it will not be enough to deliver the number of social homes needed – estimates range from £4.6bn a year as a minimum, while a comprehensive programme could require up to £15.1bn annually.”