Sky-high housing costs are top of Londoners’ concerns, and the need to get new homes built is top of the in-tray for Sadiq Khan’s third term as London Mayor, as it is for the new government.
The first step is overcoming a disastrous inheritance from the last government, which left housebuilding on its knees.
Since 2010, ministers have slashed funding for new social housing, cut local authority housing and planning budgets to the bone, and scrapped housing targets. A period of record low interest rates and Help to Buy papered over the cracks, but the foundations were undermined by these decisions. Recently, the botched implementation of vital second staircase regulations has slammed the brakes on tens of thousands of homes.
The housebuilding industry rightly warned the then government that their approach would send housebuilding into freefall, with the Home Builders Federation saying that government policy was setting housebuilding on course to hit the lowest level since the Second World War. They were ignored.
Fast-forward to this summer. Important, initial steps taken by the new Labour government have begun to stop the rot. But the Office for Budget Responsibility’s autumn Budget forecast made clear the scale of the challenge ahead. UK-wide housing completions are thought to have fallen last year to their lowest level since the post-global financial crisis slump, and are on course to fall again this year.
It’s in London where the pressures on building are most acute. In recent years housing completions in the capital hit the highest level since the 1930s, with backing from City Hall getting councils building homes again at scale for the first time in my lifetime. But London has been most exposed to government inaction – in the face of an inflation shock and higher interest rates – and, given London prices, it resulted in both buyers and builders being more reliant on borrowing.
Meanwhile, the necessary costs of making London’s larger social housing stock fit for the future with next to no help from the last government has sucked up financial headroom that would otherwise be spent on new homes.
The inheritance is dire, but I remain optimistic about the future and certain that we can and must rebuild. In London, we have a Mayor and local leaders who want to get homes built to create a fairer London for everyone. We’re determined to go further until everyone, whatever their income, has a decent home they can afford.
The Mayor and I are playing our full part in the process of rebuilding, taking steps to set up a new City Hall Developer to buy land, direct development and get homes built for the first time in decades. We’re saying “yes” to thousands of new homes when planning decisions on larger developments cross the Mayor’s desk. And we’re investing City Hall budgets in tens of thousands of council and social homes.
We’ve already shown the fruits of being able to do this hand in hand with the current government – take the plan for hundreds of homes on a car park by Cockfosters Tube station, blocked by a previous transport secretary, now given the green light by the new government.
However, we know the work of reconstruction has only just begun. The repair job on our fractured housing market will take time. But we’re determined to see it through and help rebuild the opportunity for affordable housing in our city – brick by brick.
This article first appeared in our Spotlight Housing supplement, published on 29 November 2024.
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