Housebuilding in London is “grinding to a halt”, housing associations have warned the government, with the number of affordable homes being built plummeting by three-quarters in the last 12 months.
In a letter to the housing secretary, Michael Gove, the G15, which represents the capital’s 11 largest housing associations, said his policies did not go far enough to increase supply and called for an injection of billions of pounds into an affordable homes building programme.
The letter also revealed that G15 members, which are traditionally the biggest builders of affordable housing in London, are on track to start building just 1,769 homes in the capital this year, a fall of 76% compared with the 7,363 started in 2022-23.
This week Gove announced a series of proposals he said were aimed at increasing housing development, particularly in urban areas.
One of the most significant changes was an overhaul of the planning system that would make it easier for developers to secure permission to build on brownfield sites in cities and towns.
It came alongside the publication of a government-commissioned review looking at the London plan, proposals from the city’s mayor, Sadiq Khan, that set out a framework for development in the capital over the next 25 years.
The review said the plan “frustrated” the delivery of homes on brownfield land, and said the new proposals could increase supply by 4,000 homes each year. Khan has rejected the review as “nothing more than a stunt”.
The letter to Gove, which was signed by the G15 chair, Fiona Fletcher-Smith, who is also chief executive of L&Q Group, said that while the policies were welcome, they would not meet the scale of need in London.
It said: “Your recent interventions do not go far enough to address what, by your own admission, is a broken system. Despite the crisis facing Londoners, the government has failed to step up and invest in the delivery of social housing.”
The G15 members own and manage more than 770,000 homes, and are responsible for building about 15% of all new affordable homes across the country.
Affordable homes incorporate all housing tenures that are not for market rent or sale. This includes tenures from social rent, whereby tenants pay about half market rent value, to shared ownership, whereby residents buy a share of the home and pay rent on the rest.
Figures shared with the Guardian showed the number of affordable home starts by these associations was significantly down on recent years. The previous low for affordable home starts over the last five years was in 2021-22, when construction started on 5,231 homes. That was more than double this year’s figure.
Fletcher-Smith said London’s housing associations faced a development “cliff-edge” as finances become squeezed.
In addition to rising prices of construction materials, housing associations are also having to spend more money on existing stock after the Grenfell Tower fire, fixing ageing housing and addressing the sector’s damp and mould problems.
Fletcher-Smith said L&Q, which is the landlord of 105,000 homes, had spent more than £450m on fixing fire safety defects on buildings since 2017, and also set aside £3bn over the next 10 years to bring ageing stock up to the government’s decent homes standard.
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Large housing associations, which often borrow money in the bond markets to build, also face higher interest costs for those loans. L&Q is paying an extra £200m just to service existing loans.
Fletcher-Smith said: “Once you take all of those costs out, there is just nothing left for development, we would love to build more, we just don’t have the cash. There’s a focus with the current government on home ownership, which really does matter, but we have a massive social housing need.”
The letter, which is cosigned by the Centre for London thinktank, estimated that one in four Londoners lived in poverty once housing costs were accounted for.
Recent analysis by the Guardian found that one in 10 children and teenagers were living in temporary accommodation in some parts of the capital.
The G15 letter called on the government to invest £15bn a year over the next decade so that 90,000 social rent homes could be built annually, including 30,000 in London.
The government is expected to spend £11.5bn on new affordable homes between 2021 and 2026, including £4bn in the capital.
A Department for Levelling Up, Housing and Communities spokesperson said: “We have laid out an ambitious long-term plan for housing to ensure we deliver the homes that local communities want and need. This includes our £11.5bn affordable homes programme, which is on track to deliver its target of building around 250,000 affordable homes.
“We have recently announced a £3bn boost to the affordable homes guarantee scheme, which will deliver 20,000 new affordable homes across the country.”