The capital is experiencing an unprecedented downturn in affordable housing supply, with construction starts plunging by a staggering 88% in the year leading to March. This dramatic decline, from 26,386 to 3,156 starts, marks the lowest level since records began in 2015.
Housing associations across London are grappling with a perfect storm of challenges, including soaring inflation, elevated interest rates, and mounting building safety costs. Fiona Fletcher-Smith, chair of the G15 group of large London housing associations, paints a stark picture: “We had been warning the previous government about a cliff edge coming. We are now tumbling down it.”
The ripple effects of this crisis are manifesting in escalating homelessness rates and stretched council resources. London boroughs collectively spent £4 million daily on temporary accommodation in the year to March, representing a 68% increase from the previous year.
Building safety work costs following the Grenfell Tower tragedy have hit London particularly hard. Will Jeffwitz, head of policy at the National Housing Federation, emphasises that “London is massively disproportionately affected by building safety costs” due to its concentration of tall buildings requiring remediation.
Government support for affordable housing has significantly diminished over time. Current grants cover merely 12% of new affordable home construction costs in London, compared to 75% in 1990. The Conservative-Liberal Democrat coalition’s decision to slash funding by approximately two-thirds between 2010-2015 continues to impact the sector.
The Greater London Authority reports just 582 home starts within its housing programmes in the six months to September, marking an 80% decrease compared to the four-year average. Industry experts predict this downward trend will persist, with Peabody housing association’s chief executive Ian McDermott warning that the situation is likely to deteriorate further before any improvement occurs.
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