We know how to fix London’s housing crisis – here’s what the government must do
10 June 2025, 08:10
The government must act now to prevent what would be a catastrophic collapse in the supply of new social and affordable homes.
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This month’s spending review comes at a critical time for London. Since being elected last year, the government has rightly recognised the scale of the housing emergency in the capital, which is the worst in living memory.
One in 21 children in the capital is effectively homeless. Councils are spending millions each day on temporary accommodation. There is an overcrowding crisis, and the demand for affordable housing, especially family-sized homes, far outstrips the supply.
New housing starts in London have already fallen off a cliff and it looks like we could be heading towards the lowest housing delivery numbers since the Second World War. New funding and significant policy changes are needed to prevent what would be a catastrophic collapse in the supply of new social and affordable homes by the end of this parliament.
The G15 group of London’s largest not-for-profit housing associations provides homes for around 1 in 10 Londoners. Over the last few years, our members have funded and delivered more than 56,000 new homes in partnership with the Mayor of London.
In recent years, for every pound of public money provided to build new homes, not-for-profit housing associations like Peabody have contributed around £6. A ratio of 6:1 investment which we’ve generated through borrowing and reinvesting profits from building homes for private sale.
But now, amidst a backdrop of national funding cuts, policy instability and economic turbulence, our capacity to keep investing in new homes in London is severely constrained. In next week’s spending review, we need several policy changes to help build capacity to invest alongside the mayor, providing an essential foundation to keep delivering desperately needed new social homes in London.
Here are three things national government can do to help tackle the housing emergency in London.
First, provide long-term certainty through a fair and consistent rent policy. Long-term certainty costs nothing and some social rent levels are unsustainably low having been cut and capped by government for several years. A 10-year rent settlement would provide certainty for residents and landlords alike.
At Peabody, where I am chief executive, our rents are more than £50m lower than the government’s target social rents, and the cost of looking after residents’ homes has almost doubled in recent years. We need to close that gap and restore some rent fairness and consistency over time. This would create capacity to invest in looking after homes properly as well as building new ones. Last year G15 members spent £2bn looking after residents’ homes making sure they are safe, warm and dry – with an average rent of around £130 a week in London.
Second, provide full access for not-for-profit housing associations to the £5bn Building Safety Fund. Around 90% of this government fund has been allocated for the private sector, but much of it remains underutilised and unspent. G15 members expect to spend around £4 billion on remediation over the next decade, but almost none of that is eligible for public funding support. That’s because renters cannot access the fund – it is only available to repair leaseholder buildings. Expanding access to social rented blocks would be the fair and just thing to do. It would accelerate remediation, as we would put the funds to immediate work, and it would restore some capacity for us to continue investing in providing new homes.
Third, reclassify social housing as essential infrastructure for the country to unlock billions in public and private investment. A rapid funding boost could deliver the most efficient and successful public/private partnership in history – paying for itself in jobs, affordable homes, savings to the welfare bill and growth. G15 members have the expertise and track record to deliver more alongside the Mayor of London and the private sector as we’ve done consistently before.
Decisions are imminent and critical to the future of London. With the right support and policy environment, we can work together to deliver a programme of sustainable, inclusive growth that benefits the whole of the UK.
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Ian McDermott is Chair of the G15 and Chief Executive of Peabody, the group of London’s leading not-for-profit housing associations, with more than 30 years’ experience in the housing sector.
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