At the end of March, the Housing Secretary and the Mayor of London announced a package of measures aimed at kickstarting housebuilding in London. In addition to a summary of the measures and the market response to them, this piece also looks at the underlying causes to the current lack of housebuilding in the capital.
The figures on recent housing starts in London make for stark reading. The Government’s own appraisal says that 88,000 homes a year need to be built – in 2025 the number of starts on private homes was less than 6,000. Taking just social and affordable homes, the Government’s own announcement noted 4,522 starts in 2024/25 – down from 26,386 in 2023/24. These figures must also be read in the context of the Government’s well-publicised ambitions to build 1.5m homes by the end of the current Parliament. London is expected to provide 440,000 of these homes.
It’s therefore been obvious for some time that the GLA needed to take decisive action to get things moving. In light of this, following a consultation in late 2025, on 25 March 2026, the Housing Secretary and the Mayor of London announced a range of emergency measures aimed at kickstarting housebuilding in London.
But why did things get so bad, and are these measures likely to remedy the position?
The slowdown in London is apparent across a number of metrics. A recent report by the Home Builders Federation notes a downturn in planning permission approvals for new projects, EPCs for new homes are at their lowest level since 2015, and highlights that London is delivering a smaller percentage of new homes nationally than before, notwithstanding the need to provide a quarter of the 1.5m new homes promised.
There are a multitude of reasons attributed to the slowdown. The Government itself has identified the impact of Covid, high interest rates, spiralling construction costs, and “the legacy of the previous government.” Adding to this perfect storm are a weak affordable homes market (making it difficult for developers to satisfy the requirements of planning obligations), viability issues (with costs reported to be 17% up over the last three years, but prices only 1% up over the same period according to The Times), and low first-time buyer demand.
London has also been hit especially hard by the delays arising from increased fire safety requirements. The capital accounts for a disproportionate number of higher risk buildings, which require approvals from the Building Safety Regulator. There have been reports of over 70% of applications taking longer to be processed than the 12 week statutory period, and some cases taking up to 9 months.
Finally, certain design standards in the London Plan are seen as a direct conflict with the kind of density which is key to maximising the number of new homes being delivered and ensuring their viability.
The emergency measures address a range of these issues, relating to planning, grant funding, design, and levies. The measures include:
1. The time-limited planning route, extending the existing fast-track threshold approach which does away with the need for a viability appraisal, such that it can now be used if the development provides a minimum of 20% affordable housing (of which 60% must be social rent tenure), down from 35%. There is a reduction from 50% to 35% for public and industrial land. However, there are a number of exclusions from the availability of this route – including for the demolition of existing affordable housing, such as estate regeneration projects, development on green-belt, and delivery of PBSA.
2. GLA Investment Partners will be able to use grant funding towards new planning-designated affordable homes above the first 10%, if the project uses the new time-limited planning route.
3. Developments delivered through the new time-limited planning route delivering at least 20% affordable housing will be subject to a 50% relief from Borough CIL liability. Higher rates of CIL relief may be available if higher percentages of affordable housing are to be delivered.
4. Certain design requirements in the London Plan are to be relaxed – notably cycle store requirements, dual aspect requirements, and relaxing the maximum of 8 homes sharing a core access.
5. The establishment of the City Hall Developer Investor Fund, providing up to £324m of financial support. Priority will be given to applications for stalled development sites which can complete works by summer 2029. The type of funding may vary (debt, equity, grant), and may not always be repayable. The ambition is these funds will help deliver a further 5,000 new homes by March 2029.
In addition, the Mayor is seeking increased call-in powers, allowing developments of 50+ homes to be called in (down from 150) where the borough is minded to refuse the scheme. This gives the GLA a far greater say in the fate of new development schemes in the capital.
In seeking to address the fact there is a critical bottleneck which needs to be dealt with as soon as possible, steps have been taken to ensure timely delivery of new homes benefitting from these measures. There is to be an early-stage review (potentially requiring more affordable housing or payments in lieu to the local planning authority) if planning secured via the time-limited route is not implemented within 30 months. Where CIL relief is sought, this can be clawed back if development is not completed within 5 years.
The package of measures has largely been welcomed by the development sector. They are practical measures which seek to address known issues – particularly around viability concerns. In many respects they are also an improvement on the proposals originally consulted upon, so it seems the GLA is listening to the concerns of the industry.
However, there are many issues which are not directly addressed – high interest rates, s106 demand, and the first time buyers’ market. Some of these may be addressed in time by the suite of new financing options introduced via Homes England’s Social and Affordable Housing Programme (SAHP), the National Housing Bank (NHB), and the City Hall Developer Investor Fund – particularly the proposal for low interest loans.
The response from others has been less warm, with most of the criticism being levelled at the reduction in the affordable housing requirement. However, many in the sector would take the view that “20% of something is better than 35% of nothing” (albeit there have also been calls to provide more flexibility in the tenure split requirements to access the new time-limited planning route).
The Government and the Mayor have in turn been at pains to stress that these measures are temporary, and are emergency measures introduced for emergency times. The time-limited planning route is only available for applications submitted and validated by 31 March 2028; use of grant funding for planning-designated affordable homes above the first 10% is available until the same date; the relaxed design standards will apply until the same date; and the CIL relief is available for projects commenced by 31 March 2030.
On balance, the prevailing view is that this is a sensible set of targeted measures, which should help unlock stalled development sites and address the slump in housebuilding in the capital. The Government will hope that the SAHP, NHB, and recent reforms to the planning regime, will bring about relief from some of the systemic issues. And an industry which has been buffeted by winds from all directions in recent years will also hope for calmer days ahead, bringing the stability necessary to deliver the much longed-for housing growth.
If you would like to discuss, please get in touch with one of our specialists.
Partner, Head of Planning and Infrastructure Consenting United Kingdom
Partner, Head of Living Sector, Co-head of Social Care and Later Living, Real Estate
London, UK
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