Labour MP Margaret Mullane: Our fight against the housing crisis can’t be dictated by for-profit developers

The national figures expose the staggering reality of our broken housing system: of the 208,600 homes delivered in 2024-25, only 12,198, or just 6%, were let at social rent by councils and housing associations. This is hardly surprising when our housing model is shaped by the profit margins of major developers.

Since coming into power, the Labour government has brought about measures that will help increase the delivery of social rented homes.

“The key to making the sea change is the source and method of funding for new housing schemes”

Massively uplifting investment in the Affordable Housing Programme in England to £39bn over 10 years, and a continuation of the Public Works Loan Board discounting the interest charge to councils for building homes, will contribute to increasing the supply of homes to meet housing need.

But, as positive as these actions are, they will not significantly shift the pattern or scale of development. And yet, it doesn’t have to be this way.

The key to making the sea change is the source and method of funding for new housing schemes. Higher grant levels for truly affordable social rent homes are necessary, but not the principal factor.

Instead, it’s the cost of borrowing to fund the development and construction costs of housebuilding that determines what the new homes will be, and for whom.

What is known is that there is an alternative and abundant source of funding that seeks a long-term, safe, guaranteed yield, a ‘patient’ form of investor.

A way forward has been shown in a report, Mind the (Viability) Gap from the Purposeful Finance Commission, led by the Pensions Insurance Corporation (PIC), together with Wates Group and Igloo Regeneration.

One of the asks in their report that will help deliver higher volumes of genuinely affordable homes is to give local authorities simpler and stronger powers to acquire stalled development sites or underused land at realistic prices, closer to existing use values and not so-called ‘hope’ values.

“The good news is that alternative sources of funding do exist and are ready to step in and deliver the social housing boom Britain desperately needs”

In my own constituency there is a housing development scheme currently with the local planning authority that demonstrates what can be achieved with this fundamentally different funding approach. The scheme will deliver 1,298 homes – 60% at social rent level and 40% specifically for key workers at Key Worker Living Rent, with first priority for this category going to NHS staff employed in north-east London.   

I believe if government housing construction targets are to be met and if we are serious as a nation about tackling the housing emergency, we can begin to give hope to the almost 1.4 million households on waiting lists and the 135,000 in temporary accommodation, by mobilising at scale this ‘patient’ investor model to provide the necessary volume of new, truly affordable homes.

However, this will only come about if we change how we fund housing development. The good news is that alternative sources of funding do exist and are ready to step in and deliver the social housing boom Britain desperately needs.

Margaret Mullane, Labour MP, Dagenham and Rainham