London providers to get nearly two-thirds of government’s £2.5bn social housing loans

Mr Pennycook confirmed the loans will mainly be used to deliver homes with social and affordable tenures in addition to those delivered through grant funding, but said up to 10% of the total £2.5bn pot could be used to buy up Section 106 homes, with details to be confirmed “in the near future”.

Bidding for the loans will start after the first grant allocations from the Social and Affordable Homes Programme (SAHP) are announced, which is expected to be in October this year.

The loans will be administered by the Greater London Authority (GLA) and the National Housing Bank, which is a subsidiary of Homes England and will launch in April.

Mr Pennycook’s statement yesterday was part of a raft of policy changes announced by the government this week, including the long-awaited news on rent convergence, a new social housing taskforce and details on the updated Decent Homes Standard.

London’s housebuilding woes have been widely publicised in recent months.

Last autumn, analysis by the Home Builders Federation (HBF) found new housing starts had fallen by 38% and planning permissions were at their lowest level since records began.

In the first half of 2025-26, there were just 1,200 social housing starts in the capital, meaning the city will likely only see 2,500 social and affordable homes start work this year, which would be one of the lowest figures on record.

Inside Housing’s sister website Inside Housing Living has explored the reasons behind London’s housebuilding ‘meltdown’ in more depth.

Plans to help revive construction in the city by reducing affordable housing thresholds for fast-track applications and making grant funding available for affordable homes were revealed by the government in October.

This was met with a mixed reaction from the sector, with Ian McDermott, chair of the G15 group of London’s largest providers, acknowledging the “significant housing market failure” in the capital but also calling for a “wider package” to boost providers’ capacity to invest, including low-cost loans.