Key facts
- London councils are suing Mayor Sadiq Khan over his decision to lower affordable housing targets for new developments.
- Hackney, Lewisham, and Tower Hamlets are leading the legal challenge.
- The affordable housing quota was reduced from 35% to 20% to stimulate construction.
- Housebuilders face challenges including planning delays, high costs, and rising interest rates.
- New private residential home starts in London fell 84% in 2025 compared to 2015.
London's housebuilding sector is described as 'dire,' with new private residential home starts in 2025 plummeting by 84% compared to 2015, reaching just over 5,500. This decline is attributed to a combination of severe planning delays, infrastructure levies, new safety regulations, high labor and material costs, and elevated interest rates.
In an effort to stimulate construction, Mayor of London Sadiq Khan reduced the required affordable housing quota for new developments from 35% to 20%. However, three London councils—Hackney, Lewisham, and Tower Hamlets—have initiated legal action to challenge this decision and reinstate the higher requirement. The article notes that Hackney and Lewisham have faced reprimands from the Housing Ombudsman, and Tower Hamlets has also received criticism, suggesting these boroughs are not ideal examples of best practice.
The author argues that challenging the Mayor's measures to speed up development is counterproductive and will not lead to more homes being built. Instead, the piece calls for a fundamental overhaul of the taxes and regulations burdening the sector, which is increasingly viewing building in London as unviable. Rob Perrins, CEO of Berkeley Group, is cited as reiterating calls for reduced taxes and regulations to attract investment capital.