London boroughs to receive £6bn for affordable homes
Funding over four years aims to address housing crisis, with 70% of new builds for social rent.
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The UK government has allocated £6 billion to London for affordable housing initiatives over the coming four years. City Hall confirmed that approximately 70% of the new homes funded by this programme will be available for social rent. This announcement comes as London faces significant housing challenges, with a daily cost of £5.5 million for temporary accommodation housing 210,000 residents, according to London Councils.
Addressing the Housing Shortage
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The government's target for new homes in London over the next decade is 88,000 annually. However, the mayor's draft plan sets a more modest target of just under 56,000 homes per year. Last year, the capital managed to build only 31,000 new homes. The number of affordable homes built has also seen a dramatic decrease, dropping from over 26,000 in 2022-23 to just over 4,500 last year. This decline led to an agreement to reduce the affordable housing quota in some developments from 35% to 20%.
Factors contributing to the slowdown in construction include rising building material and energy costs, impacting developer profitability and leading to demands for fewer affordable homes. Housing associations have also reduced building activity due to the need to address repair and upgrade costs for their existing properties. A shortage of construction workers further exacerbates the situation.
Boroughs Ready to Build
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London Councils, representing the capital's boroughs, has stated its readiness to increase housing delivery. Stephen Cowan, chair of London Councils, highlighted that London boroughs constructed more than half of the country's new council homes last year. He expressed confidence in the boroughs' capacity and willingness to build further, while also calling for additional government investment and access to low-interest loans for councils.
Housing associations, which are responsible for approximately a quarter of new homes in London, have welcomed the funding. Ian McDermott, chief executive of Peabody and chair of G15, expressed anticipation for clear guidance on how the money will be allocated, stating that this certainty is necessary for planning and delivery.
Political Scrutiny
The funding announcement has also drawn political commentary. The Conservative Party has accused the current government of 'backloading' the funding, suggesting that homes will not be required until 2039. Shadow housing secretary Sir James Cleverly described the announcement as a 'sleight of hand' and an 'unfunded spending commitment'.
City Hall is currently assessing bids from local authorities for the funding. Decisions on which councils will receive money and the specific number of homes they will be expected to build are expected in the coming months. Mayor Sir Sadiq Khan acknowledged that many councils lack the necessary infrastructure, such as planning officers and architects, due to past cuts, and City Hall is providing support to build this capacity.
Questions this report answers
+How much funding has London received for affordable housing?
London will receive £6 billion in funding for affordable housing over the next four years. This funding is intended to help address the city's housing shortage and is a significant allocation, representing a third of the total national funding for such initiatives.
+What percentage of new homes will be for social rent?
Approximately 70% of the new homes built with this funding are expected to be for social rent. This focus aims to provide more affordable options for Londoners struggling with housing costs.
+How many people in London are in temporary accommodation?
About 210,000 Londoners, which is one in 50 residents, are currently in temporary accommodation. The cost of providing this accommodation amounts to £5.5 million each day for the city's boroughs.
+What is the target for new homes in London?
The government's target for new homes in London is 88,000 per year for the next ten years. However, the mayor's draft plan aims for just under 56,000 per year, with only 31,000 homes actually built last year.
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