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Housing

London's Affordable Housing Targets Under Fire Amid Slowing New Homes Registration

Strategic Insights

— 2 min read

London's Mayor, Sir Sadiq Khan, is facing increasing pressure to revise his affordable housing targets in the face of a sharp decline in new home registrations in the city. According to the National House Building Council (NHBC), just 904 new homes were registered in London in the second quarter, a 59% drop from the same period last year, marking the weakest second-quarter performance in at least 15 years. Developers are lobbying the Mayor to lower the required affordable homes quota from 35% to 25% due to the mounting costs of fixing fire safety defects and a depressed level of activity from housing associations.

Key Takeaways:

  • The National House Building Council (NHBC) reported a 59% decline in new home registrations in London during the second quarter, with just 904 homes registered.
  • This marks the weakest second-quarter performance in at least 15 years, a significant drop from the 7,000+ registrations in the same period a decade ago.
  • Developers are pushing for a reduction in the required affordable homes quota from 35% to 25% due to increased costs and reduced activity from housing associations.
  • The Mayor's target of ensuring 35% of homes are affordable is seen as overly ambitious and inflexible, stymieing building and making it difficult to turn a profit.
  • The Mayor's policy of taking the majority of profits from developments with less than 35% affordable homes is also seen as frustrating by developers.
  • Affordable home starts last year were at their second-lowest level since 2008, with construction beginning on 3,991 affordable homes in the year ending March 2025.
  • The Mayor has an overarching target to build 88,000 homes a year in the capital.

Statistics:

  • 904 new homes were registered in London during the second quarter, a 59% drop from the same period last year.
  • New home registrations in the second quarter marked the weakest performance in at least 15 years.
  • Just under 7,000 new homes were registered in the same period a decade ago.
  • 35% is the required affordable homes quota, which developers argue is too high.
  • 25% is the quota that developers are lobbying for.
  • £4bn was handed to the Mayor by the previous Conservative government for his affordable homes programme.
  • £100m was contributed to the programme by Rachel Reeves in the previous year's Budget.
  • £60m was added to the programme earlier this year.
  • 1,100 new homes began construction in London during the first three months of the year, a far cry from the Mayor's target of 88,000 homes a year.

Sources:

  • National House Building Council (NHBC)
  • Sir Sadiq Khan, Mayor of London
  • Kevin Hollinrake, shadow housing secretary
  • Rachel Reeves, former Secretary of State for Levelling Up, Housing and Communities
  • Conservative government

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