‘Stump up £2.2bn or London house building could grind to a halt’, Sadiq Khan tells Michael Gove

Sadiq Khan has issued a stark warning that London house building could “grind to a halt” in a “perfect storm of pressures” without an extra £2.2bn in Government funding.

In a letter to Housing Secretary Michael Gove on Friday, Mr Khan called on the Government to stump up £2.2bn to deliver 35,000 affordable home starts by March 2026, or face developers downing tools across the capital.

It comes amid warnings that national house building could fall to the lowest level since World War II because of high interest rates and building cost inflation - a trend City Hall said was already taking root in London.

“The city has reached crisis point in relation to housing affordability and homelessness pressures,” states the Mayor’s letter.

“Without the necessary national action from the government, I fear there’s a real prospect of housebuilding grinding to a halt across the country, putting a stranglehold on the progress we’ve been making in London.”

Mr Khan said he had this week reconvened a London Housing Delivery Taskforce to hear from senior leaders across the housing sector in a bid to prevent a collapse of London house building.

Deputy mayor for housing, Tom Copley, added: “Ministers need to wake up and realise that every light on the dashboard is flashing red.

“We need an immediate injection of £2.2 billion to steady the ship and get us back on course to deliver 35,000 new genuinely affordable homes.”

Prime Minister Rishi Sunak last month announced a review of the London Plan to identify new sites to build tens of thousands new homes in the capital.

He also issued the Mayor an ultimatum of an autumn deadline to agree changes to the city’s masterplan to deliver more homes, or face the intervention of Mr Gove.

He accused Mr Khan of failing to deliver the homes that London needs and announced relaxed rules for £1 billion for affordable housing so it can be used for regeneration of old social housing estates.

But City Hall strongly defended its record, saying the Mayor achieved record-breaking affordable housing delivery last year, including the highest level of council homebuilding since the 1970s.

Developers backing Mr Khan’s call for more funding said the challenging economic environment had left housing delivery in London on a “cliff edge”.

“More public investment for social housing to complement our own, as part of a package of support, would help to reverse this,” said Angela Wood, Chair of the G15 Development Directors Group.

“It would help us fund more social rented homes and begin to tackle the crisis - lifting people out of poverty, boosting health and wellbeing, creating jobs and driving sustainable economic growth across the country.”

Last week, new research revealed that one in 50 Londoners are now homeless, prompting warnings that London’s housing crisis was becoming “unmanageable”.

Boroughs are housing almost 170,000 people in temporary accommodation, including 83,500 children, according to the data collected by cross-party umbrella group London Councils.