Build, Baby, Build: These are the solutions to London’s housing crisis

The Centre for London’s Katie Townsend looks at how to solve London’s crippling housing crisis

Some 62 per cent of Londoners don’t believe the housing market is working for them. And when one in four people in the capital are still living in poverty after paying for housing, it’s easy to see why. On top of that, there are 62,000 households across London living in temporary accommodation, and the average rent has risen to a staggering £2,086 per month.

Inadequate housing underpins public health crises, stagnating productivity, inequality and our slow progress towards net zero.

And yet, housebuilding in the capital is stalling. The number of new houses completed in 2024 has, crazily, fallen by 20 per cent  on the year. The picture is significantly worse for new affordable homes, the construction of which has plummeted by 90 per cent during the last 12 months. So – how do we build more homes? And why haven’t we already?

Brownfield first

An unappealing phrase but one that’s grown in popularity recently, meaning the opposite of the Green Belt. It’s easy to see the appeal: very few are opposed to building on underutilised and often unsightly land.

But it has limitations. Alone, a brownfield first approach barely touches the sides of the issue. By the government’s own estimations, brownfield sites in London would deliver a maximum of just 11,500 new homes. That’s a fraction of the 74,000 new homes that we at Centre for London have calculated must be built annually to solve London’s housing crisis.

The reality is that building on brownfield land can only ever form part of the solution. If the government seriously wants to tackle London’s housing crisis, they must make bold, long-term decisions.

The Green Belt myth

First and foremost, we need to build – strategically – on the Green Belt. There’s a misconception that the green belt is ‘green’, filled with rolling fields, trees and wildlife. In reality, since the 1940’s, London’s green belt has expanded to cover an area three times larger than the capital itself. As it expanded, it has sucked in increasing amounts of what is often called ‘grey belt’ land. Grey belt land includes anything from derelict buildings, disused car parks and even concrete slabs of brownfield sites situated in the green belt boundaries.

We propose that the Mayor of London is given the power and funds to build strategically on small, low-quality sections of the green belt. This could unlock space to deliver almost 900,000 new homes, building on less than five per cent of low-quality areas of the green belt near transport hubs.

Unlocking Green Belt land is increasingly popular. Our polling with Savanta revealed that 50 per cent of Londoners supported building on small sections of the green belt, with only 19 per cent being opposed. Building on the Green Belt has also made its way into the Labour Party’s manifesto – although the specifics of how this will affect London are yet to be outlined.

Development corporations

One way to build more effectively, including on the Green Belt, would be through invoking an often-underutilised structure within housebuilding – development corporations. Development corporations are public bodies which have been used to accelerate development and attract investment by taking on planning responsibilities, making compulsory purchases of land and properties, and using assets already under public ownership.

London has two mayoral development corporations: the London Legacy Development Corporation, overseeing the Olympic site in Stratford, and Old Oak & Park Royal Development Corporation, managing a site sitting across three west London boroughs. Together, these two bodies aim to build almost 60,000 new homes alongside the necessary infrastructure to support these communities, with 12,000 already built.

We know that more are coming, with the Conservatives and Labour both committing to scaling their use. Yet, the current model is not perfect. There are issues around land assembly, community accountability, attracting financing, and the legacy of the development corporations. We need to re-assess, learning from their successes and failures, to kickstart a new generation of strategic housebuilding at scale.

Prioritising social homes

Building social homes must be a priority through all delivery mechanisms. Currently, we’re selling off and demolishing social housing quicker than it’s being built – with a net loss of roughly 15,000 social homes between 2012-2022. One straightforward policy solution is an end to the right to buy scheme, to keep social housing in the hands of local councils.

As we work to reduce the loss of social homes, we must also build up our supply – and fast. To do so, the government needs to commit to investing more in social housing. At the Centre for London, we suggest investing £15.1bn to the Affordable Housing Programme. This would unlock roughly 90,000 new social homes every year, 30,000 of which should be built in London. To make sure the £15.1bn is properly managed, we propose the creation of an Affordable Housing Commission. This would hold politicians to account, while creating a 10-year, long-term strategy for housebuilding in the capital.

Again, while these plans are bold, Londoners are generally supportive. 66 per cent of Londoners agreed with our proposal for an Affordable Housing Commission, with only eight per cent being in opposition.

74,000 new homes built annually in London is a hugely ambitious undertaking. The financial cost will be high, but the cost of inaction will undeniably be higher – to health, productivity, the climate and equality. We need to use every possible policy lever if we really want to tackle London’s housing crisis.