The Mayor of London, Sadiq Khan, has approved a £50 million investment aimed at delivering more than 500 affordable homes across the capital by March 2032, in a continued effort to
address the city’s deepening housing crisis.
The funding will come from the Homes for Londoners Land Fund, a flagship mayoral programme designed to unlock land and accelerate the construction of affordable housing. The initiative has already supported the start of over 8,000 homes—reaching its target five years ahead of schedule.
Under the latest plan, City Hall will provide a £50 million loan to Peabody, one of London’s largest housing associations. The loan is expected to help unlock stalled development sites and bring forward more than 500 new affordable homes.
City Hall officials say the Land Fund remains central to efforts to tackle the capital’s housing shortage, particularly by investing strategically in land and enabling projects that might otherwise struggle to proceed. The recycling of previously allocated funds has allowed the programme to reinvest in new developments despite challenging market conditions.
Alongside the announcement, the Greater London Authority has released guidance for the first £324 million round of the City Hall Developer Investment Fund, part of a broader funding settlement. This follows a recent £1.5 billion package designed to provide low-cost loans to housing associations, helping accelerate the delivery of social and affordable housing across London.
However, the push comes at a time when housebuilding in London faces significant headwinds. Developers continue to grapple with high interest rates, rising construction costs, post-pandemic disruptions, Brexit-related pressures, and stricter building safety regulations—all of which have slowed progress on new projects.
The new Developer Investment Fund aims to address these issues by focusing on stalled sites and using flexible financing to get construction moving again. Funding is expected to become available from 2026/27, with priority projects set to be selected later this year.
Despite the challenges, City Hall points to progress made under Khan’s leadership. More council homes have been started in London than at any point since the 1970s, while overall housing completions reached their highest levels since the 1930s prior to the pandemic.
London’s housing deficit: the bigger picture
The announcement comes against the backdrop of a persistent housing shortage in London. Experts estimate that the city needs around **60,000–70,000 new homes per year**, yet delivery has consistently fallen short of that target.
This chronic undersupply has driven up property prices and rents, pushing many Londoners—especially younger residents and low-income families—out of the housing market. Waiting lists for social housing remain long, and temporary accommodation use by local councils has risen significantly in recent years.
Affordable housing is particularly scarce. While “affordable” definitions vary, many homes labeled as such are still out of reach for average earners, intensifying pressure on genuinely low-cost and social housing stock.
Urban analysts also point to a structural imbalance: strong population growth combined with limited land availability and complex planning processes. As a result, even large funding commitments—like the latest £50 million injection—represent incremental progress rather than a complete solution.
The Mayor of London, Sadiq Khan, said: “Delivering the homes Londoners need is one of my top priorities and I am determined to do everything in my power to increase the number of genuinely affordable homes in our city.
“This £50 million investment will unlock more than 500 new affordable homes, helping families across London access safe, secure and affordable places to live. By working in partnership with housing associations like Peabody and making use of available funding, we are accelerating delivery even in the face of significant challenges.
“But there is more to do. That’s why we are also launching the first phase of our City Hall Developer Investment Fund to help get more homes built faster. We must continue to work together so we can build a fairer London for everyone, where all Londoners have the opportunity of a home.”
Ian McDermott, Chief Executive Officer of Peabody, said: “This funding will help us unlock the delivery of more than 500 affordable homes across London. For the people who will live in them, that means the security of a stable place to call home and the chance to stay connected to their families and friends, work, and communities.
“Working in partnership with City Hall, the government and others allows us to plan with confidence and make the most of opportunities to build where homes are most needed.
“This support will help us keep a strong pipeline of new homes coming forward - so more Londoners can find a genuinely affordable place to live in the neighbourhoods they know and value.”