Collapse in construction activity causing alarm but mayor and Whitehall face pushback over ‘extreme solutions’
Collapse in construction activity causing alarm but mayor and Whitehall face pushback over ‘extreme solutions’
Sadiq Khan has known for a while that he has a problem with housebuilding in London. But last week a consultancy published figures about the scale of the problem, which prompted full-scale alarm in City Hall and Whitehall.
The analysis from Molior showed that new housebuilding in the capital had collapsed. Only 40,000 homes are under construction – two-thirds the normal rate – and in the first three months of the year builders started work on just 3,248 private sector units.
“It is a perfect storm of economic conditions impacting housebuilding,” said one City Hall source. “It’s an emergency, we cannot wait to act,” added a senior Whitehall official.
The reasons behind the sudden collapse in new building are complex.
When Khan became mayor he increased the amount of affordable housing that developers had to include to qualify for the fast-track approval process from 20% to 35%, or 50% for developments on industrial or public land.
He also tightened the definition of affordable housing so it applied mainly to the cheapest rented homes and those being sold under shared ownership schemes.
For a while it worked. Although overall housebuilding levels fell, the number of social and affordable homes went up. In 2023, builders began work on more than 116,000 affordable homes in London and more council houses than at any time since the 1970s.
But then economic conditions began to take a toll.
Building in the capital has always been expensive given there is not much undeveloped land and developers often have to knock down existing buildings first.
