Homes for London: Building up to the local elections

As troubling data continues to emerge about the London construction sector, the Government and the Mayor of London announced a new support package last week aimed at reviving development activity. With Molior reporting that London is on track for fewer than 5,000 private construction starts in 2025, a 16 year low, and half of London now deemed unviable for development, questions remain about the effectiveness of these measures.

The policy paper outlines several targeted policies to address viability challenges in London:

• A temporary CIL relief of 50% and fast-track process for developments committing to 20% affordable housing, down from the previous 35%.
• New call in powers for The Mayor on schemes over 50 homes. 

These changes will be implemented through a 6-week consultation and secondary legislation.

Further proposals include:

• Removing guidance that restricts density, including dual aspect and cycle storage requirements,
• A £322m of initial grant investment has been allocated to a City Hall Developer Investment Fund – a project long trailed by City Hall.

While the announcement promises to “turbocharge” construction, planning expert Simon Ricketts calls it more of a “jump start.” Political criticism has focused on the reduced affordable housing quota, following the logic that 35% of zero houses is zero, with the Green Party and Labour’s Florence Eshalomi MP questioning if lowering the quota will really lead to more affordable housing overall. 

Indeed, the changes may have limited effect, as many developments already fall below 20% affordable housing after viability assessments. Lowering the threshold simply removes the need for the expensive and timely middleman of viability assessments.

Though the reforms may streamline planning, they don’t tackle deeper issues like rising costs, skill shortages, and weak demand that have a larger impact on the viability of stalled sites. The Building Safety Regulator also faces a backlog and workforce constraints, despite pledging to clear historic new build applications by year-end.

Developers welcome the measures but call for demand-side support. Social housing advocates stress the need to increase affordable provision to address homelessness and reduce boroughs’ £5m daily spend on temporary accommodation.

With May 2026 elections looming in London, opposition parties are sharpening their housing messages: 

• Lord Bailey for the Conservatives proposes scrapping affordable targets, mortgage reform, tax relief for volume-built homes, and fast-tracking public land schemes.
• The Green Party urges more government funding for council housing rather than continuing to rely on the private sector.
• The Liberal Democrats criticised centralised planning powers, warning they undermine local decision-making, especially on green belt land.

The success of these temporary measures, and London Labour, will be judged by whether an uptick in housebuilding can be seen before the May elections. Sustained success for housebuilding in the capital may have to wait for a broader raft of supply and demand side interventions, see the recently published Housing Select Committee’s report on land value capture for example, and a sunnier economic outlook.