The proposed emergency measures to boost housing delivery in London – including a lower threshold for onsite affordable housing provision before viability tests apply – are a welcome and pragmatic step.
No one working in the affordable housing sector wants to see an important supply of below-market stock reduced, but at a time when development viability is stalling so many schemes across the capital, it is better to deliver 20% of something rather than 35% of nothing. Housing delivery in London is at its lowest level since 2014, and according to the GLA, a third of boroughs recorded zero housing starts in the first quarter of this year. If these emergency measures from the Government and London Mayor get schemes moving and shovels in the ground, more people will have places to live at prices they can afford.
Crucially, the announcement signals that policymakers recognise the need for flexibility if we are to be serious about tackling London’s housing stasis. That same principle of flexibility should guide how we think about other policy levers, such as the Community Infrastructure Levy (CIL).
CIL was designed to help fund the essentials that make neighbourhoods function, such as roads, schools and playgrounds. Yet, a narrow definition of infrastructure means that councils can’t always use the funds where they are needed most. As a result, there is between £2bn and £4bn in unspent CIL sitting idle in council bank accounts across the country, while housing need reaches crisis levels. According to London Councils, boroughs are spending an extraordinary £5.5 million a day on homelessness – primarily on temporary accommodation for families.
Below-market homes may not be seen as conventional infrastructure that keeps cities moving – but without them the UK capital risks grounding to a halt.
Research by Savills for Dolphin Living finds that 290,000 households earning less than £90,000 will no longer be able to afford to live in inner London by 2035. This is at a time when the city needs an additional 200,000 workers over the next decade to support our public services and key sectors, such as healthcare and hospitality.
Oxford Economics’ Cities & Regions team has found that the capital’s housing crisis has resulted in the city being the UK’s weakest-growing region since 2008, as skilled workers find the city increasingly unaffordable and unattractive.
At Dolphin Living, we see every day how good quality affordable homes for working Londoners not only help people get on in life, and create stronger, more resilient communities – but also benefit the functioning of London’s vibrant economy.
How can we fund the affordable housing London so desperately needs – be it properties available for social rent which will transform the lives of homeless families – or intermediate rented homes to enable essential workers on modest incomes to live close to their place of work?
Due to the heavily centralised nature of local government financing – the incredible economic value generated in central London does not translate into the equivalent revenue for its councils to spend on local housing need.
Consider Westminster in the very heart of the capital. It is the UK’s most economically productive district and in 2023/4 alone it generated £2bn in business rates for the public purse. However, the vast majority (96%) of these funds were redistributed elsewhere. In the absence of more fiscal devolution, an opportunity surely lies with unspent CIL monies and with the principle of flexibility shown in the emergency housing measures.
The Westminster Property Association (WPA), together with Westminster City Council, has urged the Government to enable greater flexibility in CIL rules. We first raised this with the Minister of State for Housing and Planning, Matthew Pennycook MP, in May and reiterated the call ahead of the Autumn Budget.
Allowing councils, under clear guidance, to allocate a portion of unspent CIL to support the viability of affordable housing schemes could have an immediate impact. Often, the gap between build cost and affordable housing revenue is modest but decisive. While S106 funds can be legally restricted and may place an additional strain on development viability, targeted CIL contributions could unlock schemes that already have planning permission, local support and partners ready to deliver.
Such flexibility would not dilute CIL’s purpose. Investment in core physical infrastructure remains essential, and long-term plans for funding improved transport connectivity and community facilities must continue. But enabling unspent CIL to support affordable housing, particularly in urban centres like London where affordability is so acute, is entirely consistent with its core aim of ensuring development keeps our neighbourhoods functioning and supports wider economic growth.
London’s housing crisis will not be solved by a single reform. But adopting flexible, pragmatic approaches wherever possible will help move the dial. The Government and GLA have taken an important step with their emergency measures. Extending that pragmatism to CIL could unlock dormant funds and help deliver the affordable homes London’s communities, employers and economy urgently need.
