The State of the Capital 2026 report says rising construction costs, viability pressures, regulatory complexity and constraints in the planning and delivery system continue to hold back affordable housing delivery across the capital.
The report welcomes measures introduced over the past year, including the £39bn Social and Affordable Homes Programme, the reintroduction of rent convergence and the government’s low-cost loan support for housing associations.
However, given the scale of the challenge in London, further reform is needed to reverse falling housing starts, tackle rising homelessness and overcrowding and unlock long-term growth.
The recommendations for government are to:
- complete London’s devolution settlement through greater fiscal powers for the city
- develop a new subsidised shared ownership staircasing mortgage product
- update the shared ownership household income cap in London to expand eligibility, support demand and unlock new supply
- reduce duplication and over-prescription in regulation
- expand flexibility on grant and other funding support to help provide more family homes
- unlock stalled section 106 delivery by mandating earlier housing association involvement
- provide long-term policy certainty to support institutional investment, innovation and participation
- allow more flexible use of recycled capital grant funding
- introduce new partnership models for public land release, and
- support housing association and local government work to reform the social housing allocations system.
G15 members currently house one in 10 Londoners and typically deliver one in four new homes built in the capital.
Ian McDermott, chair of the G15 and chief executive of Peabody, said: “The government has taken important steps to support affordable housing delivery, but London continues to face unique challenges that require targeted solutions. This report sets out practical reforms that could unlock investment, improve delivery and help tackle the capital’s worsening housing crisis.”