Can London build the homes it needs?

To say London faces a housing challenge is like pointing out it has been hot this summer.

Everyone knows it, everyone has been talking about it for ages and everyone has their own ideas about how to deal with it.

So will this week's government announcement of funding for a new affordable homes programme be the start of the solution, or the latest in a line of ambitious attempts from governments of all colours to address the issue?

History suggests that setting targets is a lot easier than hitting them.

This week's announcement confirmed that London and its mayor will get £6bn to spend on affordable housing over the next four years.

We are told about 60% of that money will go to local councils to build new homes and that approximately 70% of the homes built will be for social rent.

There was no detail though on exactly how many homes would be built or where.

City Hall said it would assess bids and work with its partners and the government before it announced its targets in the coming months.

Mayor Sir Sadiq Khan was with Housing Secretary Angela Rayner at a council-led building project in Kidbrooke to mark the announcement.

Greenwich, the local council, has a well-established council house building programme. It is not the same for all of London's boroughs, as the mayor admitted.

"Many councils haven't got the experience because of the hollowing out over the last 20 to 30 years under previous governments of the infrastructure they need - planning officers, architects, planning consultants etc. So from City Hall we're supporting councils to build up their capacity," Sir Sadiq said.

With London's allocation being a third of the amount for the whole country, Sir Sadiq said City Hall had seen more applications from councils for money to build homes than it had expected.

Officials are now going through those bids before deciding who will get the money and how many homes they will be expected to build.

The setting of targets is not a new game, but it is one that has become increasingly difficult in the capital over recent years.

A simple look at the numbers will give you a flavour of the challenges ahead.

The government target for new homes in London each year for the next 10 years is 88,000.

But, perhaps recognising the reality of the situation, the mayor's latest draft London Plan set a target of just under 56,000 a year.

The actual number of new homes London managed to build last year was 31,000.

Take a look at the number of affordable homes being built and the picture is even more stark.

In 2022-23, more than 26,000 affordable homes were built across the capital, but that dropped dramatically to just over 4,500 by last year.

That led the government and the mayor to come to an agreement to drop the quota for affordable homes in some developments from 35% to 20%.

Everyone in the industry, and indeed in the corridors of power, recognises this is not a problem that can be solved by governments and targets alone.

The rising cost of building materials and energy have hit profitability in the building sector and mean developers have pushed for fewer affordable homes on developments.

Cash-strapped housing associations have cut back on building as they try to meet repair and upgrade costs on their current properties.

And a shortage of people to actually do the building, whether that is construction companies or individual trades, has led to a slowdown.

There are many factors that make the push to build more a tricky endeavour.

Despite the clear challenges, there has been a positive reaction to this week's announcement from those expected to deliver a lot of the new homes.

London Councils is the cross-party group that represents the capital's boroughs.

Its chair, Stephen Cowan, said "Boroughs stand ready to deliver. Last year, over half of the country's new council homes were built by London boroughs – and councils have the capacity and willpower to go further."

But while saying they are prepared to go further, they want the same from the government too, calling for "additional investment, including access to low-interest loans for councils".

Others wanting a seat at the table are London's housing associations, which say they deliver around a quarter of new homes in the capital.

Ian McDermott, who is the chief executive of Peabody and the chair of G15 - which describes itself as the "collective voice of London's largest housing associations" - welcomed the government funding but called for a clear voice on how the money was going to be spent.

"We're looking forward to working with the GLA as it confirms the allocations for London," he said. "This will give housing associations the certainty they need to plan and get on with delivering the homes London urgently needs."

That "urgent" need is easily illustrated by another set of statistics.

At the moment, according to London Councils, one in 50 Londoners is in temporary accommodation, equating to approximately 210,000 people.

Paying for that accommodation costs London's boroughs a total of £5.5m every day.

On top of that, more than 300,000 Londoners are on council housing waiting lists.

Something needs to change then, but has the government got it right?

Not according to the Conservative Party, which has accused Prime Minister Andy Burnham of "backloading" the funding to fall outside the spending review.

Shadow housing secretary Sir James Cleverly said: "This is a sleight of hand under Labour, and yet another unfunded spending commitment. The small print shows homes won't have to be delivered until 2039."

If the challenges of building homes are huge, the challenge of building political consensus over how to do it seems just as big.

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