Government is right to tackle the issue of London’s unviable housing
The government has recognised that housebuilding in London has become unviable and has announced a raft of measures to help get London housing projects off the ground.
Richard Beresford, chief executive of the National Federation of Builders (NFB), said: “The government inherited a set of policies which made many housing projects unviable, so supply was always going to take a hit. We hope that today’s announcement is the first step in understanding the costs and blocks to development.”
With just 2,148 housing starts in the first half of 2025, including a third of boroughs recording zero housebuilding starts in the first quarter of the year, the government have reacted with the following measures:
- The Mayor can review and call-in housing schemes of 50 homes or more where boroughs are minded to refuse. City Hall can also become the decision-maker in developments of 1,000sqm or more on green belt land.
- Expediting the call-in process in certain cases without the need for a full hearing process, for instance in sites with 20% affordable housing. This is expected to cut six months from the planning process.
- Earmarking £322m to establish a City Hall Developer Investment Fund to ensure the Mayor can further increase housebuilding.
- Consultation on time-limited emergency relief from the Community Infrastructure Levy (CIL) where this is necessary to unlock development, which will apply to projects that commence after the new regulations come into force and before 31 December 2028.
- Some design restrictions will be withdrawn, with developers instead handed more flexibility so long as homes have adequate passive ventilation, daylight and privacy, and to avoid overheating.
- Flexibility in residential cycle storage requirements to reflect demand and account for the rise of dockless bikes and e-scooters in London.
Rico Wojtulewicz, head of policy and Market Insight at the NFB, said: “The government were handed a poison chalice when it came to the supply of new build homes. Build costs spiralled due to poorly assessed planning policies and regulations. The Building Safety Regulator has exacerbated this with its massive backlog. Mortgage rates remain a challenge for buyers, many of which are waiting to see if they come down.
“Today’s announcements are welcomed, and it shows the government is serious about new housing. There remains so much to unpick about housing viability and affordability. To reach the 1.5 million home target the government must start reducing the cost of building further. This means removing disproportionate costs like affordable housing and for the public sector to instead focus on social housing and infrastructure delivery at scale.”