London's housing crisis has taken a dramatic turn as three borough councils - Hackney, Lewisham, and Tower Hamlets - launch legal action against Mayor Sadiq Khan over his decision to slash the affordable housing quota in new developments from 35 per cent to just 20 per cent. This move, intended to boost housebuilding in the capital, has been met with fierce resistance from councils who argue that a higher proportion of affordable homes is crucial for addressing London's chronic shortage.
The Mayor's office claims its decision was an 'emergency measure' aimed at tackling what it sees as an 'absurd distortion' hindering construction. However, industry insiders paint a stark picture, with research by consultancy Molior revealing that new private residential home starts in London plummeted to just 5,500 in 2025 - an 84 per cent drop from 2015 levels, despite sustained demand for housing.
Housebuilders cite a litany of challenges driving this slowdown: protracted planning delays, crippling infrastructure costs, the weight of community levies, and rising labour and material expenses. 'Dire' is how one leading developer described the construction landscape in London - and it's not just the number of homes being built that's the problem, but also their affordability.
Industry leaders like Rob Perrins, boss of Berkeley Group, have called for reduced taxes and relaxed regulations to unlock development, arguing that overly stringent affordable housing requirements can stifle growth. But council representatives insist that a higher proportion of affordable homes is essential for meeting Londoners' needs in one of the world's most expensive property markets.
The dispute highlights the delicate balance between the need for more homes and the demand for genuinely affordable housing - a challenge that has dogged policymakers and developers for years. As the courts consider the borough councils' case, one thing is clear: London's housing crisis shows no signs of easing anytime soon.