The latest housing supply data shows that London is not only missing its annual housing targets, but there is also a divergence in the distribution of net additional dwellings across the capital. Newham and Tower Hamlets lead the way in new homes delivery, with inner London boroughs accounting for 49 per cent of total net additional dwellings over the last three years.

The disparity in delivery across London exacerbates the existing housing crisis, as concentrating development in central locations favours the delivery of high density flats over family housing. Inner city brownfield sites often drive higher land values which increases viability risk across developments, making affordable housing delivery even more challenging.

As ongoing economic uncertainty continues to impact London’s development market, the future delivery of homes is set for a challenging period.

The delivery of new homes across London falls for the second year in a row

Across London there were 37,200 net additions to dwelling stock in the 12 months to March 2022, representing a 9 per cent increase on the previous year. Although a step in the right direction, this remains considerably below City Hall’s annual housing target of 52,000 and less than half of the 86,250 required under the Government’s Standard Method of calculating housing need (2022).

Conversions and change of use continue to contribute to delivery figures, but new build remains the biggest contributor to net additional dwellings, accounting for 85 per cent of delivery across London in the year to March 2022. However, the boost in overall net additional dwellings somewhat disguises the underlying issues facing London’s residential development market, as new build completions actually fell for the second successive year in a row to just over 31,500 homes.

Net Additional Dwellings Breakdown

Inner London boroughs continue to punch above their weight

There remains a significant gap between delivery and housing targets across different boroughs. As a proportion of dwelling stock, London boroughs have demonstrated some of the highest and lowest rates of delivery across England. In the year to March 2022, Tower Hamlets increased its dwelling stock by 3.2 per cent. Over the same period, Bromley grew by just 0.1 per cent, the third lowest of all English local authorities.

If ambitious housing targets are to be hit, there must be substantial increases in new homes delivered in outer London boroughs. This is especially relevant given the latest Standard Method for calculating housing need, which indicates that in 2021/2022 outer London delivered just 38 per cent of their housing need compared with 50 per cent across inner London.

The map below shows stark disparities continue to occur between areas where new build delivery is occurring and boroughs which have a more restrictive planning policy.  In navigating restrictive planning policy, boroughs will either have to build high-density housing, or review their Green Belt strategy to deliver enough homes. Greater protection for the Green Belt announced last week suggests that the latter will become more challenging in the coming years.

NAD as percentage of stock

^{Source: Savills Research using DLUHC}

Further information

Contact Tom Genner or Hamish Simmie

Savills Planning

Savills Research