London boroughs are set to cut £264 million from council housing budgets over the next three years in a bid to prevent a collapse in their housing finances, according to a new cross-party warning.
A report by London Councils, the body representing local authorities across the capital, has revealed that the cost of maintaining and managing social housing has soared, while income has failed to keep pace due to national restrictions on rent increases.
These restrictions have capped rent rises below inflation, leading to growing financial pressure on local authorities.
Currently, London boroughs own and manage around 390,000 council homes, housing over one in ten of the city’s households. However, the report, Crunch Point for London Council Housing Finances, highlights that many boroughs are now unable to maintain current spending levels in real terms, despite growing demand and the urgent need for investment in housing stock.
London Councils is calling for immediate support to address the funding shortfall, warning that without action, boroughs will be forced to scale back investment, delay maintenance, and cut plans to deliver new social homes.
The financial strain is attributed to years of underfunding, rising inflation, and legacy issues that have placed significant pressure on borough housing budgets. As a result, councils are facing difficult decisions just as demand for affordable housing continues to grow.
The Government has responded by acknowledging the scale of the housing crisis and has outlined plans for a new five-year social housing rent settlement. The aim is to provide the housing sector with greater certainty and support investment in new affordable homes.
As Labour positions itself for leadership in addressing the capital’s housing shortage, experts including Piali Das Gupta, Strategy Director at London Councils, are urging a renewed focus on long-term investment, policy reform, and partnership working to meet London’s housing needs.
With housing remaining a critical issue for millions across the capital, the call for sustained funding and bold action is becoming increasingly urgent.
