HOUSING developers in London will be allowed to reduce the number of so-called affordable homes they build under government plans to boost housebuilding in the capital, it was revealed today.

Housing Secretary Steve Reed and London Mayor Sadiq Khan are expected to announce the package within weeks, in what officials describe as a “time-limited intervention” to reverse the sharp fall in construction.

The plans have been welcomed by developers but condemned by homelessness charities, who warn they will worsen record levels of homelessness.

To qualify for the fast-track planning process, developers currently need to include 35 per cent affordable housing. 

The government is considering cutting this to 20 per cent, while increasing subsidies for cheaper homes and allowing councils to waive a local tax on developers.

One official said that the government needs to act urgently and “20 per cent of something is better than 35 per cent of nothing.”

Shelter campaigns and policy director Mairi MacRae said the move will “allow profit-driven developers to continue looking after their bottom line at the expense of 97,000 children who are growing up homeless in the capital.”

“The government must urgently reverse these plans,” she said.

Figures show the number of homes under construction in London has dropped from around 60,000 between 2015 and 2020 to 40,000 today — with forecasts suggesting it could fall to as low as 15,000 by 2027.

In the first three months of 2025, builders began work on just 3,248 new private-sector homes in London.

A report by the Centre for Policy Studies said this week that this amounted to 0.12 new homes per 1,000 people, compared with a national average of 0.5.