Only 20 per cent of homes in new developments would have to be “affordable” and available to Londoners on low incomes, under emergency changes designed to revitalise the dormant housing industry, it has emerged.
The new rules would mean Sir Sadiq Khan’s current requirement for 35 per cent of developments to be “affordable” would be ditched.
Instead, a 20 per cent target would be introduced, with half the affordable homes being funded by developers and half by the relevant borough council, probably using Government funds distributed by City Hall.
A formal announcement is expected before the end of October.
The 20 per cent target was first reported by The i Paper on Thursday after it obtained a leaked memo from housing officials.
Sir Sadiq has held talks with Housing Secretary Steve Reed over an "emergency reduction" to the Greater London Authority target for developers to allocate 35 per cent of new homes as affordable housing.
However, this has sparked fears of a fall in the amount of social housing in London – and that developers could seek to renegotiate the amount of affordable housing in already approved schemes.
Two weeks ago, the mayor told The Standard that “nothing is off the table” as he considered whether to reduce the affordable target in the hope that it would result in more homes being built.
He said he had been taking to developers, councils and the Government about the “perfect storm facing the housing sector, not just in London but across the country”.
Only 347 affordable homes were started across London between April and June - a fraction of the 88,000 new homes the Government says are needed each year in London.
In 2023/24 there were only 2,358 affordable starts, though this increased to 3,991 in 2024/25, according to City Hall data.
Earlier this year the mayor was allocated £11.7bn for affordable housing in London between 2026 and 2036.
The construction industry says the 35 per cent rule, coupled with safety regulations introduced in the wake of the Grenfell Tower fire and delays in the planning process, are to blame for the collapse in housebuilding.
In 2017, Sir Sadiq introduced a “fast track route” for major developments that allowed developers to bypass “viability” negotiations by ensuring 35 per cent of the development was classed as affordable housing.
Last month, the House Builders Federation reported that only 30,000 homes were completed in London in the year to June, down 12 per cent from the previous year and significantly below the 2019/20 peak.
In addition, planning permissions have fallen to the lowest level since records began in 2006, with just 966 projects approved in the same period.
Aydin Dikerdem, cabinet member for housing at Wandsworth Council, told i Paper: "This would be a huge blow to social housing delivery in London.
"Every planning permission we already have at 35 per cent will likely be resubmitted at the lower figure with less social and affordable housing; it won't speed anything up, in fact, it could do the opposite."
Neal Hudson, a housing analyst, said that changes in London could have a knock-on effect on other areas, adding: "This would bake-in an expectation that the affordable housing requirement for developers could change."
A spokesman for Sir Sadiq said on Thursday that the mayor’s priority was to “getting as many affordable homes built as possible”.
The spokesman said: “The mayor and Secretary of State met recently to discuss the challenging conditions facing housebuilding in London.
“The disastrous legacy and underfunding from the last Government led to record construction costs, high interest rates, and lengthy delays from the Building Safety Regulator, which created a perfect storm leaving the capital facing the worst conditions for housebuilding in decades.
“The mayor is working with the Housing Secretary on a package of reforms to boost housebuilding in the capital.
“Expected to be launched in the coming weeks, the changes will aim to unblock stalled sites and give the mayor stronger levers to approve homes and bring thousands of homes forward more quickly.”
A source close to Mr Reed told i Paper that no decision has been made, but said the Housing Secretary was particularly concerned about house building in London and that affordable housing would still play "a vital part of our effort to build 1.5 million houses" across the UK.
