One in twenty London children are now homeless, a figure that underscores the severity of a housing crisis that campaigners and local leaders warn is turning the capital into “a tale of two cities.” The stark statistic, which equates to at least one homeless child in every London classroom, comes as three borough councils launch a High Court challenge against Mayor Sadiq Khan’s plans to slash affordable housing targets, arguing the policy will make the situation worse.
Record numbers in temporary accommodation
New data from London Councils shows that almost 183,000 people — one in 50 Londoners — are currently homeless and living in temporary accommodation. The number of children in this situation has hit a record high: as of June 2025, 97,140 children were in temporary accommodation across the capital, a 7% increase from the previous year. That means 80% of all homeless children in England are now in London.
The waiting lists for social housing tell a similar story. As of December 2025, 341,421 households were on London’s social housing waiting lists — a 30% increase over the past decade and four times the 7% rise seen across England as a whole. London accounts for 25% of all households on waiting lists nationally, despite making up only about 16% of the population. Newham and Lambeth have the longest lists, with over 38,000 households each. Average waiting times are punishing: 844 days for a one-bedroom property and 2,304 days — more than six years — for a four-bedroom family home. Grace Williams, London Councils’ Executive Member for Housing and Regeneration, said the growing numbers were “the latest evidence of spiralling pressures in the capital,” adding that London was “grappling with the most severe housing and homelessness crisis in the country.”
The problem is not new but is worsening. More than 60% of households with children in temporary accommodation in London have been there for two years or more, trapped in a system that Shelter’s Director of Campaigns and Policy, Mairi MacRae, described as leaving families “languishing on waiting lists for years on end.”
Empty luxury flats and the ‘investment asset’ city
At the heart of the crisis, critics say, is a property market that has prioritised overseas investors over ordinary Londoners. London’s housing stock is now estimated to be worth over £90 billion in overseas ownership alone. A study by the London School of Economics found that for every 1% increase in the share of residential transactions to foreign entities, house prices rise by 2.1%. Research from 2014 suggested that average house prices in England and Wales could have been 19% lower in the absence of foreign investment.
The impact is most visible in the phenomenon of “buy-to-leave” properties — luxury apartments snapped up by international buyers and left empty. While definitive evidence is hard to come by, some properties show abnormally low electricity use, suggesting prolonged vacancy. Transparency International UK has highlighted that billions of pounds of investment, some “fuelled by the corruption that robs public services of vital funds all around the world,” are flowing into London property, exacerbating the housing crisis. The capital, the anti-corruption group notes, has become a safe haven for “crisis capital” fleeing instability elsewhere. “While Londoners find themselves priced out of the capital, many new homes are left unused by wealthy investors based overseas,” the organisation said.
In the first quarter of 2024, Hong Kong-based buyers made up 13.5% of overseas homebuyers in London, followed by Singapore (8.2%), the USA (6.4%), the UAE (5.4%), China (5.2%), and Malaysia (5.1%). The cumulative effect has been to drive house prices out of proportion to local incomes and push up rents across the board.
It is against this backdrop that three London councils — Tower Hamlets (independent), Hackney (Green Party-led), and Lewisham (Green Party-led) — have launched a judicial review at the High Court against Mayor Sadiq Khan’s plan to reduce the affordable housing quota from 35% to 20% in new developments. Seven local authorities are backing the action, including Lambeth, Southwark, Waltham Forest, and Haringey. The councils argue that City Hall has not followed proper process or conducted adequate consultation on the change, which they claim will have a “detrimental impact” on their ability to deliver affordable homes.
Lutfur Rahman, the Executive Mayor of Tower Hamlets, said: “It is a scandal to cut the affordable housing quota when the need for genuinely affordable homes has never been greater. Our city is increasingly being turned into an investment asset for the super rich rather than a place where ordinary Londoners can afford to live, work and raise a family.” Liam Shrivastava, Executive Mayor of Lewisham, added: “London is in an unprecedented housing crisis, and private developers have a duty to play a role in supporting our city. It would be totally wrong to allow their profit to go unchecked while thousands of people are on councils’ housing waiting lists.” Zoe Garbett, the Green Party Executive Mayor of Hackney, described the proposed measures as “a developer’s solution” that would “stifle what we are able to do as London directly elected mayors and leaders in our boroughs.”
The proposed change, put forward jointly by Housing Secretary Steve Reed and Sadiq Khan, would lower the threshold from the 35% figure that Khan himself introduced in 2016 (replacing a previous 20% fast-track requirement). City Hall argues the reduction will incentivise developers to build homes more quickly. But critics point out that some developers are already reportedly holding back schemes in anticipation of the cut, and that the homes built under a 20% quota would not be affordable for ordinary Londoners — and could simply end up as empty investment flats. Labour MPs have expressed concern that the change could allow developers to build more “yuppie flats” and worsen homelessness. Campaigners warn it gives developers permission to “wriggle free of their responsibilities.”
The Mayor’s record on housing delivery has also come under scrutiny. While Khan secured over £4.8 billion from the government to start building at least 116,000 affordable homes by March 2023, fewer than 8,000 homes had been started under the 2021-2026 affordable homes programme by February 2026 — leaving a shortfall of nearly 10,000 to meet the lowered goal in the final three months. In the first three months of 2025, builders started work on just 3,248 private sector units. The total number of council homes in London has fallen from 715,000 in 1980 to 390,000 in 2024, a 45% decline largely driven by Right to Buy sales. Khan has been credited with bringing council housing back: over 25,000 council homes have been built or are underway since 2018, and he launched the Council Homes Acquisition Programme to buy 10,000 homes from the private market over a decade. But campaigners say this is not nearly enough to meet demand. A spokesperson for the Mayor of London said: “We can confirm that a claim for judicial review has been issued against the GLA. As legal proceedings are ongoing, we are unable to comment further at this stage.”
Overcrowding and unfit homes
The crisis extends beyond homelessness and waiting lists to the conditions of the homes Londoners do manage to find. Census 2021 data shows that London has the highest proportion of overcrowded dwellings in England, at 11.1% — more than double the England average of 6.44%. Overcrowding is especially acute in social rented housing, where 16.4% of homes are overcrowded. The worst-affected boroughs are Newham (25.33% of households overcrowded), Tower Hamlets (22.68%), and Brent (22.57%). In total, more than one million Londoners are trapped in overcrowded housing.
Beyond space, there is the issue of basic habitability. An estimated 3.7% of London homes have damp or mould issues. Eight of the top ten UK local authorities with the highest number of mould and damp complaints are in London — including Haringey, Hammersmith & Fulham, Lambeth, and Lewisham. More than 60% of people in the UK now live with mould in their homes, a figure that has risen, and the cost of living crisis has made it worse: 56% of those affected say reduced heating has worsened the problem. The original article, quoting Lutfur Rahman, described homes “unfit for human habitation because of damp, mould or pests.”
The confluence of homelessness, empty luxury flats, overcrowding, and unfit homes has led to a situation where, as Rahman put it, “London is becoming a tale of two cities, with luxury apartments bought up by overseas investors and left empty, while families languish on housing waiting lists, and 1 in 20 children in our city homeless.” The councils’ legal challenge now tests whether the Mayor’s policy will accelerate or reverse that divide. Transparency International UK’s warning remains stark: “Londoners aren’t the only ones losing out: demand for London property is fuelled by the corruption that robs public services of vital funds all around the world.”
