London must double the number of homes it builds each year by building strategically on low-quality areas of Green Belt land, or ‘grey belt’, a new report by the city’s think tank Centre for London reveals. This would allow the capital to double annual housebuilding from the 37,000 homes built in 2021/22 to approximately 74,000 a year for 15 years to build enough homes for Londoners on a small fraction of currently protected land.

Centre for London’s report, Homes Fit for Londoners: Solving London’s Housing Crisis, is the second and final part of their research programme looking into long-term solutions to meet London’s housing needs. The report diagnoses the three key causes of London’s housing crisis:  the city has not been allowed to grow; its housing market is structurally unfair; and we lack a long-term vision for housing.

London has a chronic shortage of homes, and the capital’s housing crisis is only getting worse. The city has systematically underbuilt new homes for decades, creating a backlog of people who need homes.

To meet the investment in homes our capital and country need, and combat London’s growing housing crisis, parties need to make long-term commitments. The number of people sleeping rough in London has increased by nearly 50 per cent in the last decade, and over 300,000 London households are on the waiting list for social housing. While the cost of fixing this is high, the cost of inaction will undoubtedly be higher.

Homes for a growing London

The city’s population has grown by nearly 32 per cent since 1991, but its housing stock has expanded by just less than 29 per cent. We need to build more homes to accommodate our growing population.  Delivering the homes that England and its capital needs will require a coordinated approach, working collaboratively with the private and third sectors. It is a necessary investment that will bring long lasting benefits—homes are the backbone of the economy and make economic growth possible.

1. National government should increase its investment in the Affordable Homes Programme to £15.1 billion a year to fund the building of 90,000 social homes a year in England. More than 30,000 of those should be built in London.
2. National government should adequately resource local authority planning departments, both through expanding grants and tying planning fees to inflation.
3. The Mayor of London and national government should set up Development Corporations to build on strategically defined areas of the Green Belt, and ensure they compensate for any loss of nature.

A fairer London

London’s housing market is unfair. Londoners on benefits often can’t afford their rent, with benefits covering the rents of just two per cent of homes in London. Meanwhile, homelessness is on the rise in London. We need to reform our tax, benefits, and private rental systems to reduce, rather than reinforce, inequality.

4. National government should commit to annually increasing the Local Housing Allowance rates for Housing Benefit (the part of the benefits system which helps with rent) so that it continues to reflect that actual cost of renting. This must come in tandem with an increase to the benefit cap reflecting the rising cost-of-living since 2015 or, preferably, a removal of the cap entirely, so that households can benefit from the increase in LHA without being pushed over the threshold of the benefit cap.
5. National government should devolve control over property taxes to London, and the Mayor should introduce a proportional property tax to replace council tax and stamp duty.
6. National government should end the Right to Buy scheme for council tenants, to retain homes in the social sector and allow the stock to grow.

A long-term vision for housing

Housing policy is plagued by institutional short-termism and frequent announcements of destabilising reforms. There have been 16 housing ministers since 2010. Although the system does need change, it equally needs stability.

7. National government should create 10-year rent settlements from 2025 so that local authorities and housing associations can build new homes and improve existing ones, with a review if inflation exceeds a certain level.
8. National government should create a £4.45 billion Net Zero Fund, to fund retrofits and renovations of social housing, £766 million of which should be spent in London. If institutional investment can be crowded in, this figure could be significantly reduced.
9. National government should extend the term of each Affordable Homes Programme from 5 years to 10 years to give housing providers the certainty they need to build.
10. National government should create an Affordable Housing Commission that sets government funding for affordable housing based on expert projections, rather than short-term political decisions.

Josh Cottell, Head of Research at Centre for London said:

“All Londoners should have access to affordable, safe, and good quality homes, that provide stability and offer access to essential amenities. Today, this vision is out of reach for many.

London’s housing crisis is the result of policy failures – it is within our gift to solve it. The upcoming mayoral and general elections create the perfect opportunity for parties to do just that, by implementing the long-term solutions we have outlined in this report.

From investing in new homes that Londoners can actually afford to live in to devolving powers to the Mayor to tax homes fairly and in a way that leads to growth, planning into the future rather than relying on short-termism will secure the city’s future.”

This report was the second and final part of the Homes Fit for Londoners programme. The first report, Homes Fit for Londoners: London’s Homes Today, was published in August 2023. The programme has been sponsored by Legal & General Affordable Homes, the G15, the London Housing Directors Group and London Legacy Development Corporation.