Mayor of London calls for £2.2bn emergency funding as starts plummet

Sadiq Khan has repeated his call for the government to inject £2.2bn in emergency funding into affordable housebuilding and criticised ministers for failing to take action to kickstart “a stalling market”. 

He warned that a failure to boost funding was exacerbating “a national housebuilding downturn” and that extra funding was needed to keep housebuilders on site in London and across the country. The latest Greater London Authority figures, published on Tuesday this week, show that between April 2023 and March 2024, building started  on just 2,358 grant-funded affordable homes in the capital, down from 25,658 in the previous year.

Khan, who was re-elected on 2 May, also promised £100m in kickstart funding as an early priority for his third term as mayor.

The £100m Housing Kickstart Fund, which Khan announced in March, will target stalled developments across London, with a focus on switching market sale homes in stalled developments to social housing, to re-start building.

The mayor’s record on housing delivery came under significant scrutiny in the run up to the London mayoral election, with housing secretary Michael Gove criticising his performance.

The mayor said that while London continued to meet its Affordable Homes Programme (AHP) targets, government investment was not high enough, which will mean affordable housebuilding in the capital is below the level required to house all Londoners who need it years to come.

In February, G15 members and the Centre for London called on the government to increase AHP grant funding to £15.1bn per year over the next 10 years to address the affordable housebuilding crisis.

Savills has also warned that housing completions could fall to just 160,000 next year across the entire country and have emphasised that more affordable housing is “critically important”.

>> Read more: Gove and Khan’s row over London’s housing delivery numbers explained 

Khan said: “National housebuilding is set to fall to around half the level ministers have promised, but they have yet to act when it comes to the urgent need for public investment to kickstart a stalling market. Just as national housebuilding loses momentum they’ve still got their foot on the brakes rather than stamping hard on the accelerator.

“London will continue to hit its Affordable Homes Programme targets, even as ministers fail to do the same outside of London, but current low levels of investment don’t measure up to the scale of the challenge we face. This comes as the sector continues to face a perfect storm of higher prices for materials and the spike in interest rates.”

He added that he would continue to act “wherever I can”, including with the £100m kickstart fund. However, he emphasised that “ultimately this is a national crisis that needs national action. It is only through increased government funding that we can continue our vital work to build a better London for everyone”.

Fiona Fletcher-Smith, chair of the G15 group of London’s leading housing associations, said: “More than 175,000 Londoners are homeless and living in temporary accommodation – equivalent to one in 50 residents of the capital.

”This figure also includes 85,000 children – one child in every London classroom. London boroughs are now spending £90m a month on temporary accommodation, pushing some to the brink of bankruptcy.”

Fletcher-Smith stated that with “a crisis of this magnitude” more housing of all types is needed, but the most acute need is for affordable, preferably social housing.

She said that as the largest providers of affordable housing in London, the G15 welcomed any initiatives that will boost supply, including the Housing Kickstart Fund.

However, she added: “We also desperately need innovative funding solutions and a long-term plan to boost new supply in London, and will continue working with the Mayor of London and other partners on this.

“Making the case for long-term investment isn’t limited to tackling the immediate and critical issues of undersupply and affordability. Every £1 invested in social housing delivers at least £2.70 in economic benefits, supporting long-term growth and underpinning local jobs, skills and supply chains.”