London Mayor's New Housing Policy Targets Affordable Rentals for Local Residents

The Greater London Authority (GLA) has launched its Affordable Rental Housing Policy, set to reshape the city's rental market by prioritising the development of 20,000 affordable rental homes over the next five years. The policy affects London renters earning up to 60 per cent of the median local income and is designed to address acute housing affordability pressures across the capital.

This policy update arrives amid a persistent housing affordability crisis in London, where average private rents have risen faster than wages for several years. According to the Office for National Statistics, median monthly rents in London reached £1,500 in early 2026, up 8.5 per cent from the previous year, far outpacing the 2.1 per cent wage growth recorded over the same period. The rising costs have stretched household budgets, particularly for families and key workers.

What This Means for London Residents

The new policy requires developers receiving public land or funding from the GLA to allocate at least 40 per cent of new homes as affordable rentals capped at Local Housing Allowance rates. For local renters, this translates into more options available below typical market rents. For instance, in boroughs like Newham and Lewisham, where average rents currently range between £1,200 and £1,350 per month, affordable rents under the policy could be closer to £900 to £1,000 monthly.

The scheme also includes provisions for maintaining tenancy security, with leases set for minimum terms of three years, up from one-year terms common in the private market. This aspect aims to reduce tenant turnover and provide longer-term housing stability for low- and middle-income families. Community groups have noted this could particularly benefit NHS workers and teachers, who often struggle to remain in London due to housing costs.

Evidence Behind the Policy Direction

The GLA’s decision is grounded in an internal housing needs assessment published earlier this year. That report revealed that approximately 110,000 London households are in acute housing stress, defined as paying more than 35 per cent of income on rent or residing in overcrowded conditions. Additionally, budget documents from the London Mayor's office allocate £1.2 billion over the next five years to support affordable housing projects, signalling a significant investment shift prompted by these statistics.

Policy analysts point out that alongside the GLA’s funding, changes to the London Plan now mandate affordable rental quotas for larger schemes (over 50 units), a requirement expected to yield new affordable rentals in key growth corridors such as Old Oak and Park Royal.

Looking ahead, the GLA will track the policy’s impact through an annual Affordable Housing Delivery Report, scheduled for release from mid-2027. This report will monitor progress on the number of affordable units delivered and any changes in rental price trends within targeted boroughs. Meanwhile, local councils will be responsible for overseeing compliance with tenancy duration standards, working alongside housing associations and developers.

Residents interested in the scheme’s developments can find detailed policy documents and progress updates on the Greater London Authority’s official website, where consultations on the wider housing strategy remain open through October 2026.