London’s Mayor, Sadiq Khan, has unveiled a £1.5 billion package of ultra-low-interest loans aimed at kick-starting the delivery of thousands of new affordable and
social homes across the capital.
The funding will be channelled through City Hall’s new City Hall Developer Investment Fund (CHDIF) and made available to housing associations at interest rates as low as 0.1 per cent — a level not previously offered for housing finance in London.
City Hall says the initiative is designed to help overcome the severe pressures currently facing the housing sector, including high borrowing costs, rising construction prices, post-pandemic disruption, Brexit-related challenges and delays caused by building safety regulations.
Unlocking stalled sites and accelerating delivery
The low-cost loans, secured with support from central government, will sit well below current market rates and are intended to unlock difficult or stalled housing sites across London. City Hall believes the innovative finance model will allow housing providers to move forward with developments that would otherwise remain unviable.
The £1.5bn boost builds on an initial £322 million allocation confirmed last October, when London became the first major UK city to receive funding from the Government’s National Housing Delivery Fund. That early funding formed part of emergency measures agreed between the Mayor and Housing Secretary Steve Reed to speed up housebuilding in the capital.
With today’s announcement, the total value of the CHDIF rises to £1.82 billion, putting City Hall close to its long-stated ambition of a £2bn developer investment fund. The latest tranche accounts for 60 per cent of the £2.5bn national allocation, underlining London’s central role in the Government’s housing delivery strategy.
Record investment amid tough conditions
Despite what City Hall describes as a “perfect storm” for housebuilding, the Mayor says progress has continued. More council homes have been started in London under Sadiq Khan than at any time since the 1970s, and before the pandemic the capital recorded its highest level of new home completions — across all tenures — since the 1930s.
On average, London has delivered more than 10,000 additional homes per year compared with the previous mayoral administration. Since 2018, over 25,000 council homes have been completed or are currently under construction with support from City Hall funding. Last year also saw the highest number of council home completions through GLA-funded programmes since 2016–17.
Long-term commitment to affordable homes
The City Hall Developer Investment Fund was first pledged in the Mayor’s 2021 manifesto and later backed by the Kerslake Review, an independent assessment of how housing delivery on Greater London Authority land could be accelerated.
Today’s announcement sits alongside a wider, long-term investment programme of up to £11.7 billion through the Mayor’s Social and Affordable Homes Programme over the next decade — the largest and longest funding settlement of its kind ever secured for the capital.
City Hall is urging housing associations and developers to come forward with bids, stressing that the combination of grant funding and ultra-low-interest loans offers a rare opportunity to deliver genuinely affordable homes in every London borough.
The Mayor of London, Sadiq Khan, said: “This £1.5 billion investment from our new City Hall Developer Investment Fund will help us kickstart the delivery of more affordable homes.
“We’re doing something that hasn’t been done in decades – providing low-interest loans to build the affordable homes Londoners desperately need.
“There are so many good, affordable housing projects in our city that need some extra support to get going. These low-interest loans will help make these homes a reality.
“I will continue to work closely with Government, councils and other partners and do everything I can to accelerate the delivery of genuinely affordable homes as we continue to build a better, fairer London for everyone.”
Housing and Planning Minister Matthew Pennycook said: “Through our new 10-year £39 billion Social and Affordable Homes Programme, support for the City Hall Developer Investment Fund, £1.5 billion in funding for low-interest loans, and investment in planning capacity and capability, we’re giving London the tools it needs to address the severe housing delivery challenges it is facing.
“Working in close partnership with the Mayor, we are committed to delivering record numbers of social and affordable homes in the years ahead so that more Londoners can enjoy a decent, safe, secure and affordable home of their own.”
Kate Henderson, Chief Executive of the National Housing Federation, said: “We strongly welcome these low-cost, long-term loans being made available to help turn the tide on the housing crisis in London.
“Housing associations are eager to build much-needed, truly affordable social homes across the capital and these loans will help unlock their capacity to do so at scale and pace.”
Rachael Williamson, director of policy, communications and external affairs at the Chartered Institute of Housing (CIH), said: “This additional investment in the City Hall Development Investment Fund is a welcome boost for affordable and social housing delivery in London. Long-term, low-cost finance will help housing associations unlock complex sites and maintain momentum in building the homes Londoners urgently need. Partnership approaches like this are vital to supporting delivery at scale in challenging market conditions.”
Ian McDermott, Peabody CEO and Chair of G15, said: “Tackling London’s housing crisis is a shared mission for government, the Mayor and housing associations, and this announcement reflects the strength of the partnership. This low-cost, long-term funding will have a positive impact alongside the ten-year Social and Affordable Homes Programme and support and accelerate delivery in the years ahead. At Peabody and across the G15, we’ll continue to do all we can with the Mayor and the boroughs to help reduce homelessness and overcrowding and meet urgent housing need across the capital.” Photo by Lauren Hurley / No 10 Downing Street, Wikimedia commons.