A Sobering Look at new Housing Permissions in the Capital.

Written by Michael Stanworth – Director

Our annual London Planning Report has uncovered growing evidence of a ticking housing timebomb in the capital. The year-on-year chronic undersupply of new homes is now feeding into London reaching a ‘cliff edge’ as housing starts plummet, and housing completions will surely soon follow.  

For London’s politicians, from councils through to City Hall and the Mayor himself, the challenge is now starker than ever. Housing demand continues to rise, housing supply is stalling, and the type of new homes being proposed is changing too. For the capital’s leaders, time to set up new and innovative ways to meet these challenges is running out.  

During the six years we’ve collected data, London has faced two general elections, two local elections, the pandemic and economic uncertainty. But, with London’s Boroughs collectively paying £4m a day in temporary housing costs and Barnet announcing the need for central government intervention to remain solvent, there needs to be urgent intervention to avert this ‘cliff edge’ becoming the new normal. 

In 2024, 30,154 homes were approved across London, an increase of just 694 on the number of new homes given the green light in 2023. However, the number of affordable units continued to fall, down from 9,150 in 2023 to 9,069 in 2024. 

The number of affordable homes approved fell by 48% between 2022 and 2024. 

There is now a sustained downward trajectory in housing supply in London, affecting almost every housing type, size and tenure. London boroughs have simply not been approving anything close to enough homes to meet the city’s needs between 2019 and 2022, meaning there was no oversupply to compensate for the significant financial challenges facing developers over the past two years. 

The challenges of bringing forward land for development in the capital are now showing up not just in planning committee decisions but also housing starts. The Financial Times reported that affordable housing starts dropped 88% in the year to March, from 26,386 to 3,1561. It is expected to affect housing completions soon, too. 

Housing associations, the driver behind the delivery of affordable housing in the capital, often have to choose between delivering additional stock or covering the cost of remediating existing homes, and this has a knock on effect to London’s boroughs who, last year, collectively spent £4m a day on temporary accommodation for people facing homelessness, an increase of 68% from the year before. 

What does appear to be financially viable, and perhaps the only sectors to be so, are student housing and co-living developments. This is possibly due to due to their relatively quick financial returns compared to a traditional build-to-sell development. 

Whilst a number of privately-owned residential developers continue to plough an increasingly lone furrow of C3 housing, London’s new housing in the coming years will focus, perhaps positively, on those for whom buying their own home is not just a distant aspiration, but not even on their radar. 

Download our annual London Planning Report here.