G15 leaders warn of threat to national growth if affordable housing not boosted in London

The leaders of the largest housing associations in London have warned Andy Burnham that the capital’s housing affordability crisis could be a threat to national growth if action is not taken.

Five G15 leaders, speaking on a webinar with Housing Today, re-iterated recommendations in the recent State of the Capital report to boost affordable housing, including a call for greater fiscal devolution for London.

Paul Hackett, chief executive of Southern Housing said the crisis in London is a crisis of affordability and it is critical that people can afford to live there who are employed on average salaries.

He said: “We’re seeing less activity from the private sector. If the affordable sector doesn’t step in, then we could see a complete collapse of housing supply in London. That would be devastating for the London economy, it would be devastating ultimately for the national economy.”

Mel Barratt, chief executive of Metropolitan Thames Valley Housing, argued that while Burnham thinks about “prosperity around the country” as part of his devolution agenda he must also focus on meeting the challenges in London.

The comments come as recent official figures showed more than 420,000 people have left the capital in the 12 months to June 2025, with many commentators pointing to housing affordability as a key factor behind the exodus. London fell short of its housing target by 58,000 homes last year and there are also an estimated 210,000 people in temporary accommodation.

The latest annual State of the Capital report, produced by Housing Today and G15, makes several recommendations for boosting affordable housing, including greater devolution.

Ian McDermott, chief executive of Peabody and chair of the G15, called for devolution to ensure more flexibility around the use of funding.

“We have to be confident that it is devolution, not delegation - that when devolving authority for spending the social and affordable housing programme, for example, that the London administration can make those decisions about what an appropriate grant level is themselves without the restriction from the Treasury or from any other part of government. That’s fundamentally important.”

McDermott said the only way to solve the capital’s housing challenges is to give the Greater London Authority the freedom to deploy resources as they “understand the needs better than Whitehall will”. He said the ability to combine different spending heads in a manner appropriate for a place, “can only be done locally.”

He also as a first step a chunk of stamp duty revenue could be devolved so that money generated by London housing prices can go to the GLA.

Clare Miller, chief executive of Clarion, said: “I think the principle of local decision-making is really important when you’re talking about housing and communities and the longer term prospects for places” Although she cautioned against creating layers of bureaucracy.

Another key recommendation in the State of the Capital report is for housing developers to be mandated to involve housing associations early in section 106 negotiations.

The G15 earlier this year published a guide called Building Together, Building Better: Rethinking S106 for Affordable Housing Delivery’ as a “practical framework for developers wanting to work with affordable housing providers.”  The guide sets out 24 principles and standards for future section 106 homes to help housebuilders meet the needs of housing associations. The guidance says affordable housing providers should be involved in decisions about new projects from early stages, ideally at the pre-planning or land acquisition stage. The G15 believes this enables the design of places which genuinely meet the long-term needs of all residents.

But for those that don’t engage, the State of the Capital report argued they should be mandated to do so. This could be done through the planning and funding system, by for instance, by tying engagement to eligibility for grants or loans.

Fiona Fletcher-Smith, chief executive of L&Q, said: “The majority of house builders will want to engage with this. But for those who don’t understand the importance of it, a bit of mandating is always useful.”

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The panel urged the government not to alter the existing 10-year social housing rent settlement, pointing out the sector and investors need certainty to invest.

Fletcher-Smith said: “A 10-year rent settlement gives us certainty to be able to do the business we need to do, to borrow and therefor invest in the homes we already have but fairly importantly for London, to build more.” She said she would therefore caution against ministers thinking about a rent freeze linked to concerns about cost of living.

The chief executives on the webinar also re-iterated the State of the Capital report’s call for a new shared ownership staircasing model funded via top-slicing of recycled grant capital funding.

The annual State of the Capital report, produced by Housing Today in partnership with the G15 is informed by a discussion of social housing leaders at the Building the Future Conference. It provides an assessment of the current outlook for London’s affordable housing sector and sets out recommendations to help accelerate affordable housing delivery across the capital.