Drop in London's new affordable homes being built

The group representing the largest housing associations in London says there has been a 66% drop in new affordable homes being built in the last two years.

In a report, the G15 urges "swift action" in the face of a "deepening housing crisis".

According to its findings, just 4,708 new home builds started in 2024–25, down from 13,744 two years earlier. Between January and March this year there was a 7% drop in new build starts, compared with the same period in 2023.

City Hall insisted it was working to "build a better, fairer London for everyone"; while the government said it was determined to "tackle the acute and entrenched housing crisis".

According to the report, the number of homes completed also fell, with 9,200 homes handed over in 2024–25, down from the previous year's 10,356.

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The G15 says it has "consistently raised concerns" about the barriers to building new social and affordable homes, adding their new report "reinforces the scale of the challenge".

The release of this report comes ahead of the government's spending review in June, where it will lay out its long term spending plans.

Reacting to the findings, Ian McDermott, who is the vice chair of the G15 and chief executive of Peabody, called the current situation a "perfect storm".

He said: "This is the most challenging environment we've ever worked in.

"Standards have changed since Grenfell, the cost of building has gone up and the shortage of labour is a real problem.

"Our ability to support and fund development has come down because we're spending more money on building safety and maintenance and management of homes."

The G15 is calling for three measures to be adopted as part of the upcoming Spending Review, which it says would "empower the sector to accelerate delivery and support the government's housing ambitions":

• A 10-year rent settlement to provide long-term certainty for planning and investment
• A rent convergence mechanism – to enable fair and sustainable rent levels across housing providers
• Full access to the Building Safety Fund for housing associations – ensuring parity with private sector landlords and supporting vital safety works

It says these proposals would "remove key barriers currently stalling development and unlock the full potential of housing associations to meet demand".

A spokesperson for the Mayor of London said Sir Sadiq Khan had "prioritised tackling the housing crisis" since taking office nine years ago.

"The Mayor recognises that affordable housing providers have been badly affected by under investment and policy uncertainty under the previous government," the spokesperson said.

"Last week he announced that he is exploring how parts of the green belt can be used for house building, as well as investigating different approaches to increase the number of small and medium sized building companies, who in decades past have been far more prominent in delivering London's new homes.

"He is also working closely with the government and other partners on major programmes to boost housebuilding, including setting up the Mayor's Construction Academy which provides the training people need to get into the industry and grows the local talent pool for employers."

The G15 says the decline in building new, affordable homes is part of a "wider pattern of stagnation in housing delivery".

The group argues it follows "years of underinvestment, policy, instability and inflationary pressures".

In addition to the need for new homes, London's housing stock is ageing.

Recent research by Centre for London revealed a third of Londoners have experienced damp and mould and over a quarter were unable to keep their homes warm.

The G15 added this is "compounding the issue" as "billions have had to be diverted into refurbishing ageing homes".

A Ministry of Housing, Communities and Local Government spokesperson said: "We are also investing in more affordable homes with an £800 million top up to the Affordable Homes Programme and a £2 billion down payment on further funding, alongside work to unlock housing in the capital and overhaul the broken planning system."

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