Funding new affordable housing

London is experiencing a housing crisis. In recent decades the supply of new homes has not kept pace with growing demand. At present the average house price in London stands at £360,000, which is 14 times the average salary. Over 600,000 new homes are needed in London over the next 21 years.

Ensuring an increased supply of affordable housing across all sectors is one of the greatest challenges facing both the Mayor and boroughs, and underpins all of London Councils’ housing policy work, from housing benefit reform to overcrowding and homelessness.

However, the recent Comprehensive Spending Review has seen the budget for new affordable housing significantly reduced. London Councils' estimates suggest this could result in a 52 per cent reduction in the number of new homes being built for social rent.

Key to ensuring a continued new supply of affordable housing will be providing local authorities with greater control over their finances. Currently, local authorities are extremely limited in how they use money from rents and in how they can borrow money to build new homes.

We are committed to working closely with the Mayor of London to devolve housing investment decision-making in order to maximise the capital’s affordable housing budget and to ensure that the right mix of homes is built in the right areas of the capital

London Councils has also been working closely with all London boroughs to help shape the ongoing debate around the reform of the Housing Revenue Account (HRA), the system by which social tenants’ rents are distributed by the Treasury to help repair and maintain social homes across the country.

Read London Councils’ response to the previous governments’ consultation on the reform of council house financing