Labour MPs are urging ministers and the London mayor to drop controversial plans to reduce affordable housing quotas in the capital in order to boost homebuilding.
MPs have said they are concerned about the proposals being drawn up by the housing secretary, Steve Reed, and the mayor, Sadiq Khan, in response to a sudden drop in new development in the capital.
Reed and Khan are considering allowing builders to qualify for fast-track planning approval while promising to build 20% affordable homes, rather than the current minimum of 35%. Labour MPs hope to use the next few weeks before the package is formally announced to persuade them not to do so.
Florence Eshalomi, the Labour chair of the housing select committee, said: “Solving the housing crisis relies not just on how many new homes we build, but also on their affordability. One of the main drivers of the crisis we are in has been the failure over many decades to build homes that are within reach of local people.”
“This problem has been particularly acute in London, where all too often we have seen developers prioritise profitable luxury units over housing that meets the needs of people already living here.”
She added: “We must break with the failed status quo and build affordable homes that meet the needs of our communities.”
Stella Creasy, the Labour MP for Walthamstow, said: “Walthamstow has been struggling with the impact of development for years – whether in housing or in the increase in rents it causes by driving gentrification – as housing costs are the reason we have such high levels of poverty.
“We desperately need genuinely affordable housing and protections for tenants – I hope the mayor will hold firm that these targets matter.”
Another Labour MP, who did not want to be named, added: “We understand there is a crisis in London housebuilding, but there must be a way to solve it which does not involve letting developers get away without decent levels of affordable housing.”
Ministers have been aware for many months they faced a problem with housebuilding in London. But two reports published last week helped persuade government officials they needed to act fast.
An analysis of official data by the Centre for Policy Studies showed just 4,170 homes were started in 2024-25, while projections from the consultancy Molior suggested that by the beginning of 2027 there could be as few as 15,000 homes under construction.
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According to an internal memo obtained by the Guardian, Khan and Reed are considering a range of options to stimulate building, including reducing affordable housing quotas.
Other proposals include allowing councils to drop a levy on developers which helps pay for local infrastructure such as roads and GP practices, and increasing the amount of subsidy available for affordable housing.
Campaigners have warned, however, that the plans could exacerbate the city’s homelessness crisis.
Mairi MacRae, the director of campaigns and policy at Shelter, said: “While developers are allowed to wriggle free of their responsibilities to build their fair share of social homes, communities will continue to suffer. Families will be forced to continue enduring appalling conditions, watching damp and mould climb the walls with no hope of a secure home on the horizon.”
A government source said: “Housebuilding in London is clearly in crisis. Since 2020 the number of homes under construction for private sale or rent at any one time has fallen by a third, to around 40,000 today – and just over 3,000 affordable homes were started across the city in 2023-24.
“We’ve already increased London’s funding for the affordable homes programme compared to the previous government. But with so many Londoners stuck in temporary accommodation or on housing waiting lists that take years, we have to look at every lever to tackle the housing emergency we’ve inherited.
“That’s why we are working with the mayor on getting the capital building again, including the social and affordable homes Londoners desperately need.”