Housing associations are warning the government of a worrying trend that is causing housebuilding to slow rapidly in London. Over the past 12 months, the construction of affordable housing in the city has seen a significant 75% decline, raising concerns within the housing industry.
G15 calls for billions to tackle London’s decline in affordable housing
In a letter to Housing Secretary Michael Gove, the G15, which represents London’s 11 largest housing associations, expressed dissatisfaction with the adequacy of his policies in dealing with the housing crisis. The G15 argues that current measures fall short of what is needed to boost housing supply and is calling for significant financial inputs, amounting to billions of pounds, into affordable housing programmes.
This letter reveals some startling statistics. The G15 members, who are usually prominent contributors to affordable housing construction in London, are expected to start building just 1,769 homes in the capital this year. This is a significant decrease of 76% compared to the 7,363 units that started construction in the previous fiscal year (2022-23).
Gove’s housing proposal
In a recent announcement, Michael Gove set out a series of proposals aimed at boosting housing development, particularly in urban areas. Key reforms include a major overhaul of the planning system to streamline the process for developers to obtain permission to build on brownfield sites in cities and towns. The proposals come at the same time as the government-commissioned review examining the London Plan and the publication of Mayor Sadiq Khan’s proposals outlining the capital’s development framework over the next 25 years.
The review expressed dissatisfaction with the impact of London’s plans on housing supply on brownfield land and suggested that Gove’s proposals could increase housing supply by 4,000 homes a year. However, Mayor Khan dismissed the review as nothing more than a political maneuver. In response, the G15, chaired by Fiona Fletcher-Smith, who is also the chief executive of L&Q Group, welcomed the proposed policy but said it was insufficient to meet the scale of London’s housing needs. emphasized.
London’s housing crisis
Recent statistics reveal a significant decline in affordable housing starts by G15 associations. This year’s forecast shows only 1,769 homes to start, compared to 7,363 homes started in the previous year (2022-23), a significant 76% decrease.
Fletcher-Smith has highlighted the pressing financial challenges faced by London’s housing associations on the “edge” of development. Apart from tackling rising construction material costs, associations have been forced to allocate funding to address fire safety issues following incidents such as the Grenfell Tower fire. Additionally, we are dealing with an aging housing stock and issues with moisture and mold.
L&Q initiatives and financial commitments
As a major landlord with 105,000 homes, L&Q has already spent more than £450m fixing fire safety deficiencies since 2017. In addition, £3 billion is earmarked over the next 10 years to bring aging stock up to the government’s decent housing standards. This financial commitment highlights the urgent need for comprehensive solutions to address the complex challenges facing London’s housing sector.
Large building associations, which often rely on the bond market to finance construction projects, are now facing rising interest rates on their loans. For example, L&Q is incurring an additional £200m just for existing loan repayments.
According to Fletcher-Smith, “Once you subtract all these costs, there is nothing left for development. We want to build more, but we just don’t have the cash.” The focus is on, which is really important, but we have a huge social housing need.”
The letter, co-authored by the Center for London think tank, estimates that one in four Londoners lives in poverty when housing costs are taken into account.
