The proportion of affordable homes developers must provide when trying to fast-track planning is being slashed as part of emergency measures to tackle London’s housebuilding crisis.
The amount of affordable housing developers must include in a scheme to speed up their approval process is being lowered from 35% to 20%, the Government announced on Thursday.
The action is aimed at ramping up sclerotic housebuilding in the capital, which ministers said is facing “a perfect storm due to a combination of spiralling construction costs, high interest rates, the legacy of the previous government, impact of the Covid-19 pandemic, regulatory blockers and wider economic conditions”.
This has resulted in more than a third of boroughs recording zero housebuilding starts in the first quarter of the year.
Sir Sadiq Khan has been under pressure from the Labour Government to address the problem as it seeks to meet its key manifesto commitment of building 1.5 million homes by 2029.
He raised the affordable housing threshold to 35% when he became Mayor of London, but developers have argued it makes schemes unviable.
Housing Secretary Steve Reed, who took on the job promising to “build baby, build”, said: “Getting spades in the ground in London is crucial if we want to see the biggest increase in social and affordable housing and meet our target of delivering 1.5 million homes in our Plan for Change.
“I have worked closely with the mayor of London to give the capital the shot-in the arm it needs to ensure more Londoners have an affordable home of their own.”
Mr Reed countered criticism of the lower affordable homes threshold by arguing it would lead to more such homes being built.
He told Sky News: “There were only 4,000 starts in London last year for social and affordable housing. That is nothing like the scale of the crisis that we have. 35% of nothing is nothing.
“We need to make schemes viable for developers so they’ll get spades in the ground and start to build them.”
The time-limited measures, which are subject to consultation, will help kick-start thousands of homes for Londoners, the Government said.
They also include the removal of design guidance that constrains density – including greater flexibility around cycle storage amid the rise of dockless bikes and temporary relief from development levies for schemes able to start promptly.
Sir Sadiq is being handed new powers to fast-track housing, including the ability to call in and accelerate housing schemes of 50 homes or more where local authorities intend to refuse them.
City Hall will also be able to take decisions on developments of 1,000 square metres or more on green belt land.
The Government is injecting an initial £322 million into the establishment of a City Hall developer investment fund to unlock delivery.
Sir Sadiq noted that prior to the pandemic, more new homes in London were completed than at any time since the 1930s.
But, he said, in light of the current economic conditions bearing down on housebuilding “urgent action is required, which is why I’ve been working with the Government on this package of bold measures”.
He added: “I grew up in a council house, so I know the importance of social and affordable homes. I’m not willing to stand by while the supply of affordable housing for Londoners dries up.
“With these significant new powers and the initial £322 million of funding from the Government – plus the short-term emergency action to get more investment flowing into affordable housing – I’m confident that we can kickstart housebuilding and deliver more of the affordable homes Londoners badly need.
“I will always do everything I can to accelerate the delivery of genuinely affordable homes as we continue to build a better, fairer London for everyone.”
Tory shadow housing secretary James Cleverly said: “Sadiq Khan and Steve Reed are now proposing to bulldoze the soul of London, concreting over green spaces and playing fields across the capital in an attempt to make up for years of failure.
“Labour’s answer to their own chronic under-delivery is to rip up the Green Belt and Metropolitan Open Land, destroying green spaces within inner and outer London, all while failing to build on brownfield land as we have proposed.”
Matt Downie, chief executive of homelessness charity Crisis, expressed concern that the Government’s proposed solution to ending homelessness “doesn’t come close to addressing the scale of the problem”.
“Over the years we’ve seen how fiddling with targets and putting faith in market forces leads to nowhere near enough social rent homes being built,” he said.
“We need cast iron guarantees that social house building will happen at scale.”
London Councils, which represents all 32 London boroughs and the City of London Corporation, said boroughs will look at the proposed changes in detail to understand the implications for housing delivery in their local areas.
Cllr Grace Williams, the group’s executive member for housing and regeneration, said: “Ultimately, with boroughs having already granted planning permission for almost 300,000 homes in London that are yet to be built, we need to ensure housebuilders deliver on their commitments so that we can collectively tackle the housing crisis facing the capital.”
Danny Pinder, director of real estate policy at the British Property Federation, said the announcement was “a positive step in recognising and reacting to the current viability crisis” driven by “a myriad of factors across the tax and regulatory landscape”.
“One thing that today’s announcement won’t solve which is particularly affecting London are the delays at the Building Safety Regulator, where 55,000 homes are stuck waiting for sign-off for construction or remediation, half of which are in the capital,” he said.
Craig Carson, regional director of residential developer Barratt London, said: “These welcome proposals will help us start to tackle the housing crisis we face in London, delivering more homes of all tenures and the investment in infrastructure, jobs and economic growth that development will bring to our capital.
“Alongside this emergency package, it is vital that Government looks at ways we can support homebuyers in London. It is crucial we build the private homes which will deliver more affordable housing.”
