Margaret Thatcher’s Conservatives famously won the 1979 general election on the back of an election slogan “Labour isn’t working”.
If the Assembly Tories had any nous they could dust down the phrase and repurpose it for 2025 as “Labour isn’t building”.
The fact is that across the capital developers have downed tools and private sector housebuilding - has more or less ground to a halt from Hillingdon to Havering, from Barnet to Bromley.
The figures are pretty shocking. Research from analysts Molior suggests fewer than 1,000 homes began construction in the capital during the third quarter of the year. At this pace London is on course for maybe 5,000 residential starts, at best, in 2025.
It is not for lack of sites. There are currently 281,000 unbuilt homes in London that have planning permission.
As things stand developers cannot make a profit from building homes
No, the reason is a straight financial one. As things stand developers cannot make a profit from building homes. End of.
And their owners, the shareholders, will not thank them from building at a loss, they simply will wait it out until conditions improve.
The reasons why housebuilding in London became unviable are a little more complex. Many factors are involved, ranging from construction costs galloping ahead of prices, to taxes that have scared away foreign buyers, to the new post-Covid building safety regime that has created such a disastrous log-jam for developers.
All of those might have been survivable, certainly slowing delivery down but not bringing it to a halt.
But developers insist they simply cannot make the numbers stack up if they have to meet the Mayor’s target of a minimum 35% affordable homes in every scheme.
No-one disputes that it is a laudable aim, London certainly has a chronic lack of decent affordable homes. And when Sadiq Khan first announced it in 2016 it was broadly welcomed, even by developers who said that at least it brought certainty to the planning landscape.
But times have changed. Now the 35% rule hangs like a deadweight round the neck of developers. Put simply it is impossible to reconcile it with the basic requirement of private companies to make a commercial return.
Londoners are getting 35% of nothing, or close to it, and that is not helping anyone
The result is that Londoners are getting 35% of nothing, or close to it, and that is not helping anyone.
To get things moving again the Mayor will have to swallow his pride and accept, perhaps temporarily, that market conditions will only support a smaller slice of the development cake being allocated for affordable housing.
It does appear that talks between the Mayor’s team and Whitehall are heading in that direction.
The new requirement could be reduced to 20%, or even less, and there are some suggestions it could fall even as far as 10%. As the Mayor himself concedes, nothing is off the table.
Such a move could give that jump start to investor confidence to back London residential developers again with the capital they need to build out existing schemes and start planning new ones.
Something has to give, the current stasis cannot be allowed to continue. And not just for social and economic reasons. Without London firing on all cylinders, Keir Starmer cannot hope to meet the 1.5 million new homes target he set for the his Parliament.
That failure would be an open goal for the Conservatives and, perhaps more relevantly, Reform in 2029, half a century after Saatchi & Saatchi’s memorable campaign swept Mrs T into power.
