The government’s decision to change the quota for the amount of affordable housing for new developments in London from 35% to 20% has been described as an “extraordinary”, but necessary measure to help support the capital’s housebuilding sector.

City Hall said the change is designed to speed up planning decisions, encourage developers, and increase housing supply. Developers who include 20% affordable housing in their proposals will be eligible for fast-tracked planning applications.

The announcement also grants the Mayor of London additional planning powers and funding. City Hall can now intervene in planning applications for developments of more than 50 homes that were previously rejected by borough councils, compared with the previous threshold of 150 homes.

A £322m Developer Investment Fund has been established to further incentivise construction.

According to the Home Builders Federation, only 30,000 new homes were built in London in the year to June, far below the government’s target of 88,000 per year to meet the city’s housing needs.

Alister Henderson, partner, Carter Jonas, said: “Extraordinary challenges call for extraordinary measures. Therefore government’s publication of its Homes for London: policy note was no surprise, given the unprecedented housing slowdown in London.

“The proposals announced in the government policy document are indeed extraordinary, demonstrating that the government is serious about turning around the problem.”

Possibly the most significant of these measures is the is the proposed temporary drop in affordable housing requirements, with viability reviews required only for schemes proposing fewer than 20% affordable homes.

Henderson continued: “While the reduction in affordable housing will be a disappointment to many hopefully the measures will help to deliver more homes in London and increase the overall numbers of affordable homes coming forward.

“The problem of housing supply in London is a deep-rooted one which has been building over months and years as a result of inflation, the impact of the Building Safety Act and a lack of consumer demand for housing. It is important that the duration of these measures is taken into account that the problem which has built over time and cannot be resolved swiftly. And there must be sufficient flexibility to allow the measures to function as effectively as possible and future funding will be key for delivery of more affordable homes.

“But the magnitude of the response will certainly prove good news across the board – from housebuilders who have been stuck in a viability quagmire for many months, to residents who have been unable to buy in London due to reduced supply.

“The consultation represents the first step in the steep climb towards resolving London’s housing crisis. But it will be important to realise that even this may not enough to fully, and permanently, move the dial and that further measures may be needed.”