wrans/answers2025-11-28 conversation_27
Source: hansard.parliament.uk (2025-11-28)

UK Parliament Hansard data: wrans/answers2025-11-28 conversation_27

Bob Blackman:To ask the Secretary of State for Housing, Communities and Local Government, what assessment he has made of the potential impact of lowering affordable housing requirements on levels of social housing supply in London in the (a) long and (b) short term. \p Matthew Pennycook: When it comes to development, London faces challenges that are common to all parts of England over recent years. These include a significant increase in building material prices; a rise in financing costs; and planning capacity and capability pressures.

In addition, the capital faces a number of challenges unique to its housing market which differs in important ways from the rest of the country. These include the fact that London is overwhelmingly reliant on flatted developments; has depended over recent decades on demand from international buyers and investors; and has a higher proportion of landowners (and traders acting on their behalf) who are global investors allocating development funding based on competing returns globally and across asset classes.

The combination of these and other factors has resulted in a perfect storm for housebuilding in our capital. Overall home starts in London in 2024-25 totalled just 3,990. Affordable housing starts in 2024/25 were less than 20% of their 2022/23 level. In the first quarter of this year, more than a third of London Boroughs recorded zero housing starts.

My Department has engaged extensively with housebuilders, registered providers of social housing, and London Boroughs to understand fully the housing delivery challenge in London and to develop measures to address it.

While viability pressures are impacting residential development in many parts of the country, we know they are particularly acute in London. Those pressures were already resulting in proportions of affordable housing being reduced on schemes following viability assessment. According to Greater London Authority (GLA) monitoring data, the average affordable housing level of referable applications that have been approved through their viability tested route was 20 per cent between 2022-2024.

To address this, the Secretary of State and the Mayor of London announced a new package of support for housebuilding in London that included developers to access a new, time-limited planning route to incentivise build out. This will sit alongside the existing Fast Track and Viability Tested routes and will enable developers to secure planning permission without a viability assessment on private land where they commit to 20 per cent affordable housing (60% of which must be Social Rent), of which half will be eligible to receive grant funding, with a gain-share mechanism to increase affordable delivery on sites that continue into the next decade where market conditions improve.

Our engagement with the sector indicates that these measures will encourage schemes to come forward, and existing schemes to progress, in the near-term, and will thereby support a rapid recovery in housing delivery.

The GLA opened a consultation for this time-limited measure on Thursday 27 November, and published a background information document with supporting evidence for decision making which can be found here.