London Set to Lag Behind Rural Areas in Social Housing Delivery Under £39bn Government Scheme

London is projected to address only 18 per cent of its priority social housing waiting list through the Government’s £39 billion Social and Affordable Homes Programme (SAHP), significantly trailing rural regions where the figure reaches 46 per cent, according to new research by Centre for Cities.

The analysis reveals that by 2036, London will make less than half the progress of rural England in meeting social housing demand, with established mayoral areas across England achieving 26 per cent coverage of their waiting lists. The disparity highlights concerns over the allocation of funding within the current programme.

Centre for Cities, in its report titled Rewiring council housebuilding published on 24 September 2026, argues that the £39 billion fund should be more heavily weighted towards urban centres, particularly London, where housing need is most acute and economic growth potential greatest.

Prime Minister Andy Burnham entered office pledging the “biggest council housebuilding programme” since the post-war boom of the 1970s, supported by the largest funding commitment since the 1990s. However, the report stresses that beyond increasing financial resources, strategic measures are necessary at all government levels to maximise the impact of grants.

Among the recommendations, Centre for Cities calls for a roughly 32 per cent increase in London’s share of the existing funding pot. It also advocates for enhanced powers for metro mayors over social and affordable housing budgets, mirroring arrangements already in place in London.

The report further suggests aligning UK fiscal rules with European counterparts to facilitate greater investment in public corporations, thereby supporting expanded housebuilding efforts.

To improve the efficiency and scale of social and affordable housing delivery, Centre for Cities proposes several policy adjustments:

• Granting mayors control over social and affordable housing funding within their jurisdictions.
• Allowing councils to utilise market-rate developments to subsidise council housebuilding.
• Supporting councils to build homes both inside and outside Housing Revenue Accounts.
• Reforming regulations that add unnecessary costs, such as reducing minimum space requirements for single-person one-bedroom flats and increasing height limits on single-staircase buildings.

Ant Breach, Director of Policy and Research at Centre for Cities, emphasised the need for targeted investment: “The Government has rightly committed serious money to social and affordable housing and this is in an incredibly tight fiscal context. It now needs to make sure that money is targeted where housing need is greatest and where new homes can do most to support economic growth.”

He highlighted the imbalance in progress: “Based on current plans, rural areas will build enough new social homes to make more than twice as much progress against their priority waiting lists as London. That doesn’t make sense when London has the most severe housing pressure in the country.” Breach also noted the broader economic implications, stating, “London’s acute housing shortage is holding back economic growth. Historically, London has been the engine of growth for Britain. That is less true in recent years and housing is one of the capital’s biggest constraints.”

Regarding governance, Breach added, “Across England, mayors should be given much greater control over social and affordable housebuilding. Housing markets don’t stop at council boundaries, and mayors are better placed to coordinate where homes are built, where infrastructure is needed and how funding is spent.”

Indicative calculations within the report suggest that increasing London’s funding share by 32 per cent would require a 23 per cent rise in total SAHP funding—approximately £0.9 billion annually—to maintain the current nationwide housebuilding rate. This adjustment would correspond with reductions in funding shares for other regions: a 10 per cent decrease for England’s mayoral areas outside London, an 18 per cent cut for other urban areas, and a 49 per cent reduction for rural areas.

Previous analysis by Centre for Cities estimated that to match the average public housebuilding rates seen between 1956 and 1979, annual grant funding would need to reach around £16.6 billion, compared with the planned £4 billion per year by the end of the current Parliament.

Centre for Cities is an independent think tank dedicated to improving the economies of the UK’s largest cities and towns. It works with local authorities, businesses, and government departments to develop policies that support urban economic performance through impartial research and knowledge exchange.