The number of homes being built in the UK capital has slumped as soaring costs and stretched affordability have made development financially unviable. Higher interest and mortgage rates are weighing on buyers, while increased construction costs, planning delays and new safety rules are squeezing developers, prompting many to delay starting new projects.
The number of homes under construction in London is forecast to drop to about a quarter of its pre-pandemic average, according to a forecast compiled by Molior London, a research company that tracks apartment sales. That collapse is threatening the Labour government’s target to build 1.5 million homes during its five-year term in office, a policy that was central to its election campaign last year.
“Getting spades in the ground in London is crucial if we want to see the biggest increase in social and affordable housing and meet our target of delivering 1.5 million homes,” Housing Secretary Steve Reed said.
London Mayor Sadiq Khan had previously campaigned on a promise to increase affordable housing and his flagship policy included allowing developers to fast-track the planning process if they agreed to make 35% of the homes proposed on a site affordable. That target will now be reduced to 20%, with the aim of boosting the overall number of affordable homes from more projects getting off the ground as a result.
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“The reality is however that 35% of nothing is nothing,” Centre for London chief executive officer Antonia Jennings said. “When no new developments are being built, there will be no new social homes.”
Among the measures being introduced are changes to rules on windows that have limited how many apartments can be built on a plot, a policy that’s designed to make sites more financially viable. Developers that can start new projects straight away and guarantee new affordable homes will also be given temporary relief from some levies.
Khan will be given the power to take over planning decisions for any project of 50 or more homes where local officials are “minded to refuse”, according to the statement. City Hall will also become the decision maker for projects in excess of 1,000 square metres that are planned on the protected ring of land around the capital that is known as the green belt.
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In addition, the process by which the Mayor can “call-in” a planning application, a measure that takes the decision away from local officials, will be streamlined to shave as many as six months off the current timeline.
“Urgent action is required, which is why I’ve been working with the government on this package of bold measures,” Khan said.
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