Mayor of London Sadiq Khan has taken a decisive step in addressing the capital’s acute housing shortage by announcing a major policy shift to consider releasing parts of London’s green belt for residential development – a move likely to reshape the capital’s long-term housing and mortgage landscape.

In a keynote speech delivered today in Greenwich, Khan is expected to say that City Hall will now “actively explore” green belt land development in areas close to transport links.

The change in approach comes in response to the scale of London’s housing crisis, which requires construction of 88,000 new homes annually over the next decade – totalling nearly one million properties.

The move is expected to unlock hundreds of thousands of new homes, including a significant share of affordable and social housing.

NEW OPPORTUNITIES

For housing developers, funders and mortgage lenders, this could signal a substantial expansion in the capital’s build pipeline and lending opportunity – particularly in well-connected outer boroughs and transport corridors.

Khan will make clear that brownfield sites will remain a priority but also acknowledge that they alone will not meet future housing needs.

He will also challenge traditional assumptions about the green belt, saying that much of it is “low quality, poorly maintained and rarely enjoyed by Londoners.” Only 13% of the designated land is publicly accessible green space.

LONDON PLAN

The announcement coincides with the launch of a consultation for the next London Plan, the strategic planning framework that will guide the capital’s growth for the next 20–25 years.

Among its key aims are resolving the housing crisis and enabling sustainable economic growth while protecting the environment.

Khan’s proposal stresses strategic development is supported by infrastructure investment. He will point to the need for new housing to be energy-efficient, transport-linked, and biodiversity-enhancing, signalling a planning direction that prioritises both density and quality.

AFFORDABLE HOUSING

The Mayor will also commit to attaching conditions to any green belt release, including requirements for affordable housing delivery and increased public access to green space.

City Hall will now work in tandem with central government on housing and infrastructure planning.

Khan is also expected to reference proposals for metro-style improvements to London’s rail services, and extensions to both the Bakerloo line and Docklands Light Railway – developments which could further improve the viability of green belt sites for residential schemes.

The policy has drawn explicit support from senior political and sector leaders.

BOLD PROPOSAL

Deputy Prime Minister and Housing Secretary Angela Rayner welcomed the pending announcement, stating that “the government welcomes the bold proposal announced by the Mayor today.”

London Councils chair Cllr Claire Holland said boroughs are “resolutely pro-housebuilding” and look forward to shaping the next iteration of the London Plan.

For lenders, the policy signals a long-anticipated structural response to undersupply in the capital.

The implication for housing starts, mortgage origination and long-term lending activity could be significant, particularly in the affordable and first-time buyer segments – if green belt reform accelerates delivery at scale.

Khan claims to have already overseen delivery of more affordable homes than at any time since the 1930s, with over 25,000 started in 2023 alone.

However, persistent supply constraints, planning bottlenecks and land scarcity have continued to distort pricing and limit homeownership access for key segments of the population.