The Greater London Authority (GLA) is reportedly considering lowering the affordable housing requirement for developers from 35% to around 20% in an effort to stimulate more housebuilding in the capital.
Developers have expressed concerns that the current 35% quota is making many projects financially unviable, contributing to a slowdown in construction. Data from GTA indicates that London’s building rate continues to decline, despite the government’s ambitious housebuilding targets.
According to the Financial Times, some industry players have pushed for the affordable homes requirement to be reduced further, suggesting figures as low as 10 to 15%. A senior industry source told The Standard that the final target could fall below 20%, although mayor Sadiq Khan reportedly prefers not to be seen as the key decision-maker on this issue.
Between April and June, just 347 affordable homes were started across London, a stark contrast to the 88,000 new homes the government says are needed annually in the capital. City Hall data shows affordable home starts increased from 2,358 in 2023/24 to 3,991 in 2024/25, but the numbers remain well below demand.
Earlier this year, the mayor was allocated £11.7bn for affordable housing in London, covering the period from 2026 to 2036.
The construction sector points to the 35% affordable housing rule, along with stricter safety regulations introduced following the Grenfell Tower tragedy and delays in the planning process, as key factors behind the housing slowdown.
Mayor Khan has criticised the Building Safety Regulator for “making it harder and costlier” to develop flats over six storeys. He noted that many applications have exceeded the regulator’s 12-week target review period, with numerous submissions rejected without clear reasons.
While acknowledging that post-Grenfell safety measures are necessary, Khan told The Standard that these regulations have affected the financial viability of several London housing schemes.
He said: “Roughly speaking, 94% of new homes in London are flats, but we know we have more than double the amount of high-rise buildings than the rest of the country put together.
“What I’m speaking to the government about, after listening to developers and others, is: is it possible, in these exceptional circumstances, to try to turbo-charge housebuilding in London?
“Those conversations are ongoing, and hopefully over the course of the next few weeks I’m hoping to come to an agreement with the Government about what we can do to kick-start housebuilding in London.”
A recent report from the Home Builders Federation said a potential wave of empty homes puts government’s housing ambitions at risk.
Potential wave of empty homes puts government’s housing ambitions at risk
