Sadiq warns lifting borrowing cap alone won’t fix housing crisis as he agrees £1 billion new council housing plan for London

The Mayor of London, Sadiq Khan, has warned the Government that they need to do far more to fix the housing crisis across the UK as he agreed plans worth more than £1 billion with 26 London boroughs to build 11,000 new council homes at social rent levels over the next four years. 

The plans form the cornerstone of ‘Building Council Homes for Londoners’ – the first-ever City Hall programme dedicated to council homebuilding. 

When Sadiq launched the programme in May, it set a target for 10,000 new homes – and now he has responded to overwhelming interest from boroughs by agreeing allocations for 11,154 new council homes at social rent levels, and a further 3,570 other homes, including those for London Living Rent.

Council homebuilding fell to nearly zero in the 1990s, and many councils’ ambition has been held back by a lack of resources and rigid limits on their powers and borrowing. To help them boost their homebuilding plans, Sadiq is offering councils more funding – that he secured from Government for social rent earlier this year. He is also offering support, including an innovative way to help them reinvest their receipts from homes sold under Right to Buy.

The plans will see councils increase their building rates over the next four years to a total estimated at five times greater than over the previous four years. Sadiq made clear the Prime Minister’s recent announcement that councils would be allowed to borrow more will not fix the housing crisis – and said the capital needs an estimated £2.7 billion per year to build all the council, social rented, and other genuinely affordable homes Londoners desperately need.

The Mayor of London, Sadiq Khan, said:

“London’s housing crisis is hugely complex and has been decades in the making. There is no simple fix – but council housing is the most important part of the solution. Londoners need more council homes that they can genuinely afford, and local authorities have a fundamental role to play in getting London building the homes we need for the future. 

“City Hall is using money we secured from Government to help councils go much further. It is welcome that the Prime Minister has recently listened to calls that I and others have long made for councils to be able to borrow more to build. But let me be clear: lifting the borrowing cap for councils must be just the first step of reform, not the last.

“We need at least four times the amount of money we currently get from Government for new social and affordable homes, and we need far greater powers to step in and buy land for new council housing. The scale of what I have announced shows the ambition is there in London to build a new generation of council homes – Ministers now urgently need to step up and go the distance too.”

The Mayor of Newham, Rokhsana Fiaz, said:

“I am very happy our bid for £107 million of funding from the Mayor of London has been successful. This funding will kick-start our ambitious housing programme, which will see the construction of more than 1,000 quality homes across 40 sites in Newham started by 2022, and available at London Affordable Rent.

“Newham residents are at the forefront of the housing crisis. Too many families are desperately in need of a sustainable home they can genuinely afford. We have over 27,000 households on our housing waiting list and more than 4,800 households in temporary accommodation. This is why I have committed to build over 1,000 new council homes at social rent levels over the next four years. Only through a massive council housebuilding programme can we begin to address the scale of this challenge.

“Since becoming Mayor I have been working closely with both Sadiq Khan and his Deputy Mayor for Housing James Murray to find a solution to the capital’s housing crisis. Collaborative working is essential to tackle the issues which face so many people in London. I am excited about what this announcement means for Newham and to start work to build hundreds of desperately needed new homes.”

In addition to funding, the Building Council Homes for Londoners programme offers boroughs an innovative way to ringfence their Right to Buy receipts to invest in new homes, alongside expertise and resources from City Hall to scale up their homebuilding programmes. It sits alongside the Homebuilding Capacity Fund, announced Friday 19 October, a £10 million fund which allows boroughs to bid for up to £750,000 each to help boost their housing and planning teams.