It is hard not to be outraged when you look at the stats. The fact is that London - one of the world’s leading cities - has all but stopped building homes whilst 183,000 Londoners, including nearly 90,000 children, are homeless or in temporary accommodation.
The recent outcry over speculative reports that the Greater London Authority is considering reducing the “fast track” threshold for affordable housing from 35% to 20% misses the point entirely - 20% of something is better than 35% of nothing. Some have painted this as a win for developers and a loss for Londoners. In reality, it’s an attempt to fix a broken system that has all but ground to a halt.
Because the truth is simple: London is not building.
According to Molior, just 2,158 private homes were started in London in the first half of 2025 - the lowest level in more than a decade. 23 boroughs saw zero new private starts between April and June, and only 9,100 private homes are forecast to complete across 2027–2028. The picture is just as bleak for affordable housing: only 347 affordable homes were started in Q2 2025, with 28 boroughs seeing fewer than 10. This 2,158 figure is even more stark when set against the 88,000 new homes a year target for London set by the Government.
But how did we get here? Molior cites that build costs have risen 47% since 2016, while average new-home prices are up just 4.5%. Borrowing costs remain elevated, construction labour is more expensive, and regulation continues to increase - from new fire safety rules and design guidance to second staircase requirements. Absolutely no one disputes the importance of building safety, and the rigour of our systems is a reassurance to investors and communities, but when you layer on inflexible affordable housing policies, community infrastructure levies, and a slow planning process, it is little wonder schemes are no longer viable.
Of course, not everything can be fixed by City Hall. It can’t control global macroeconomics or interest rates. It can’t dictate sales prices or global capital flows. But it can control the policy environment. It can reform regulation to make it more predictable, proportionate, and responsive to changing market conditions. That’s where leadership matters most - and where London still has room to act.
For years, London’s affordable housing system has been well-intentioned but rigid. The idea was straightforward: if developers could deliver 35% affordable housing, they would be “fast-tracked” through planning. It was designed to bring certainty and speed to a process notorious for its complexity. And it worked: from 2016 to 2019, London averaged around 23,000-26,000 home starts annually. But the world has changed - interest rates, build costs, timeframes and risk have all risen dramatically. Yet the threshold hasn’t flexed accordingly, and the industry has been faced with a ‘one size fits all’ approach’.
The outcome? Development is standing still. What little housing is being delivered must be sold at ever-rising prices to account for the inflated costs, planning burden and increasing timeframes – marketed to an increasingly small pool of potential buyers. Global investors choose where they deploy their capital, and today residential investment returns in London sit below those in Paris and Berlin, largely because of our city’s heavy and unpredictable regulatory burden.
Reducing the fast-track threshold to 20% wouldn’t be a gift to developers. It would be a recognition of the economic reality we find ourselves in and a pragmatic move to get cranes back on the skyline and construction sites moving again. It’s about creating the conditions to build more homes, including affordable ones, to tackle the growing crisis unfolding before us.
And let’s not forget what’s at stake. According to the NLA, the built environment is the largest contributor to the UK economy, contributing 24% (£568bn/annum) of Britain’s GVA and employing 3.8m people. Every new home built fuels economic growth, supports local employment, and generates tax revenues that fund public services. When building stops, that entire ecosystem suffers.
This means working collaboratively - public and private sectors together - to find a balance between aspiration and economic reality. Speculation on a reduction in affordable housing criteria (if accurate) represents a step towards reaching that balance, but it shouldn’t stop there. A wider reset is needed: one that considers suspending or simplifying levies, streamlining planning conditions, galvanising global capital and offering consistent, nation-wide guidance to rebuild confidence in the market.
We’ve seen what’s possible when that balance is achieved. At King’s Cross, we delivered 40% affordable housing - made viable through significant public grant funding and a flexible planning framework. Those conditions no longer exist. Without a new approach, even well-intentioned policies risk worsening the housing crisis by cutting off supply entirely.
If we want to be outraged, let’s be outraged that we’ve reached a point where 23 boroughs have built nothing in a quarter. That global capital, once eager to invest in our great city, now sees London as too complicated, too uncertain, and too slow to deliver. That London boroughs are collectively spending £5.5m a day on tackling homelessness, largely through the provision of temporary accommodation for families.
We need to get building again - urgently. Reducing the affordable housing threshold isn’t the problem. It might just be the first sign that London is finally ready to confront the problem and get the housing market moving once more.
Tom Goodall is Chief Executive Director of Related Argent
