London's City Hall has been forced into a major U-turn on its affordable housing policy, with senior figures admitting they "never wanted" to make the controversial move.
A 'Perfect Storm' Forces City Hall's Hand
Deputy Mayor for Housing, Tom Copley, told the London Assembly on Thursday, 4 December 2025, that the decision to reduce affordability requirements for developers from 35% to 20% was not where the Greater London Authority (GLA) wished to be. He blamed a "perfect storm of challenges" including soaring interest rates and construction costs which have caused affordable housing starts to plummet.
Official GLA data starkly illustrates the crisis. From April to September this year, developers began work on just 1,239 affordable homes. This compares to 3,991 starts across the entire previous financial year, putting the Mayor's targets far out of reach.
The Emergency Package and Political Backlash
In response to this dire performance, ministers struck a deal with Mayor Sadiq Khan to implement an "emergency housebuilding package." A core part of this deal involves significantly lowering the affordable housing quota required for developers to gain fast-track planning status.
The move has sparked fierce criticism. Green Party London Assembly Member, Zoe Garbett, accused the Mayor of "protecting the profits of developers who got us into this mess." She challenged Mr Copley, suggesting the GLA "gave up too early" on exploring other options before conceding to construction firms.
Mr Copley defended the decision, stating the economic context is "completely different" from 2017 when the original 35% target was set. "The politically difficult thing to do was to go ahead and create the emergency package," he said, arguing that "20 per cent of something is better than 35 per cent of nothing."
Temporary Measures and a Daunting Target
The Deputy Mayor stressed the new 20% threshold is intended to be temporary. The emergency package includes a £322 million government investment fund for City Hall, aimed at accelerating construction and unlocking stalled sites.
However, the scale of the challenge remains immense. Earlier this year, the GLA and the Ministry of Housing agreed to lower London's target for the Affordable Homes Programme (2021-2026) by over a fifth to between 17,800 and 19,000 starts. With only 6,370 affordable homes started since 2023, City Hall must now oversee the beginning of at least 11,430 affordable dwellings before March 2026 to meet its revised goal.
Jules Pipe, Deputy Mayor for Planning, echoed the sense of a changed world, citing falling "viability" for developers. He stated the primary aim remains to bring forward housing at volume and of good quality, acknowledging the massive challenge facing GLA planners for the next London Plan.
