Mayor warns ministers are exacerbating national housing downturn by failing to invest in new social housing

• Recently re-elected Mayor of London criticises ministers for failing to boost housebuilders and calls for £2.2bn emergency stimulus
• Sadiq promises to act where Government support is lacking, promoting £100m in ‘kickstart’ funding as an early priority for his third term
• Mayor warns this is “a national crisis that needs national action”
• Analysts Savills say an “extremely poor” national housebuilding outlook could mean just 160,000 homes a year are started across the whole country in 2024/25

The Mayor of London, Sadiq Khan has warned that ministers are exacerbating a national housebuilding downturn by ignoring calls to boost spending to keep homebuilders on site in the capital and across the country.
 
In London, Sadiq has hit every affordable housing target set by the Government, and has boosted council homebuilding to the highest level since the 1970s. This has meant spending every penny that he has been given, in contrast to ministers’ record of delivery outside of London, where their flagship Affordable Homes Programme target has been missed.
 
However, as he starts a historic third term as Mayor, Sadiq warns that while London will continue to meet its Affordable Homes Programme targets, Government investment is not enough, meaning that affordable housebuilding in the capital will be below the level required to house all Londoners who need it for years to come. The current Affordable Homes Programme runs from 2023-26 (formally meant to start in 2021, but ministers only signed off final funding for the programme in July 2023) and is worth £4bn, to build at least 23,900 homes. Today, Sadiq is repeating his call for an £2.2bn in urgent investment in new social and genuinely affordable homes, which is backed by private, public and non-profit housebuilders across the capital (1).
 
Housebuilders across the country have recently been facing a perfect storm of rising costs as a result of an inflation spike and high interest rates which have raised the cost of finance as well as hitting demand from buyers. Industry experts, Savills are warning that housing completions could fall to just 160,000 next year across the entire country and say more affordable housing is critically important (2). In February, housing associations raised the alarm on the effect on building in the capital and across the country, and wrote to the Housing Secretary, Michael Gove to ask him to act (3).
 
The Mayor is today committing to use City Hall funds to plug a small part of the gap left by Government under investment. His new £100m Housing Kickstart Fund, will target stalled developments across the capital, with a special focus on switching market sale homes in stalled developments to social housing, to re-start building.
 
But given limited GLA resources, Sadiq is urging Government to invest in new homes, both in London and across the country. In the late 2000s, stimulus spending into housing helped deliver over 40,000 social rented homes in 2010 – almost a quarter of which were in London (4) - a number that hasn’t been bettered nationally in the 14 years since, despite a wider economic recovery. 
 
Mayor of London, Sadiq Khan, 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 kickstart 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.
 
“London will continue to hit its Affordable Homes Programme targets, even as ministers fail to do the same outside of London, but current low levels of investment don’t measure up to the scale of the challenge we face. This comes as the sector continues to face a perfect storm of higher prices for materials and the spike in interest rates.
 
“I’ll continue to act wherever I can, including with £100m in kickstart funding from City Hall, but ultimately this is a national crisis that needs national action. It is only through increased Government funding that we can continue our vital work to build a better London for everyone.”
 
Fiona Fletcher-Smith, Chair of the G15 group of London’s leading 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.
 
“As the largest providers of affordable housing in the capital, G15 members very much welcome any initiatives that will boost supply. The Housing Kickstart Fund will help to unlock stalled developments and increase the number of affordable homes. We also desperately need innovative funding solutions and a long-term plan to boost new supply in London, and will continue working with the Mayor of London and other partners on this.
 
“Making the case for long-term investment isn’t limited to tackling the immediate and critical issues of undersupply and affordability. Every £1 invested in social housing delivers at least £2.70 in economic benefits, supporting long-term growth and underpinning local jobs, skills and supply chains.”