Work starting on new affordable homes in London at record low: ‘People will become homeless’

Housing associations started building just 150 new homes in London in the second quarter of 2024, raising fears of more people becoming homeless.

The 92% year-on-year fall comes as a total of 970 homes were started in the capital in three months – the second-lowest quarter on record, beaten only by the third quarter of 2023. The other 870 starts came from local authorities and private developers.

As rents spiral and house prices rise at their fastest rate in two years, the new Labour government has told London mayor Sadiq Khan to hit a target of 80,000 new homes in London per year.

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Builders completed a total of 11,130 homes in London during the first half of 2024 – but the number of starts by housing associations in that period was the lowest since records began.

“At a time when we have record numbers of homeless children living in temporary accommodation it’s very worrying, but sadly not surprising, to see a record fall in the number of new homes being started,” said Andy Hulme, chief executive of the Hyde Group.

“Unfortunately, this significant fall in housing starts will only contribute to more people becoming homeless in the coming months and years, as we do not have enough affordable housing to meet demand.”

Rough sleeping in London has increased by 29% in a year, with 4,223 recorded bedding down on the streets between April and June. 

Local authorities began just 40 homes in the second quarter of 2024. Khan has promised over 40,000 new council homes by 2030 – a rate of almost 2,000 per quarter.

London is not the only region to have seen a slowdown in new building projects, new government statistics revealed. Local authorities in the North East began just 10 new homes in 2024’s second quarter. The East of England saw housing associations begin 1,030 new homes in the same period – over six times more than London.

Hulme said social rents had not kept pace with inflation, meaning builders and landlords did not have the resources required to start and maintain properties. To deliver the housing targets set out by government, Hulme added, social rents should rise by inflation plus 1%.

“The finances of social landlords have been badly damaged by four years of rent cuts and years of below-inflation rent settlements which have cost London’s G15 housing associations £19bn in lost rental income alone – money which could have been invested in improving people’s homes,” he said.

“A ten-year, index-linked settlement for social rents must also include a reintroduction of rent convergence. More than half the homes managed by the largest housing associations in London are financially unsustainable over the long-term because rents do not cover the cost of maintaining and investing in these homes.”

A report from University College London said new projects often failed to deliver truly affordable housing, and increased rents by an average of £80 a week.

But despite accusations of “aligning with landlords against the interests of tenants”, chancellor Rachel Reeves appears set to increase social rents by inflation plus 1% for the next decade when she lays out the Labour government’s first budget at the end of October.

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