LONDON Mayor Sadiq Khan warned today that London’s housing crisis is dragging the economy down as he called for a significant increase in investment to build more affordable and social homes.

He also called for the creation of a devolved City Hall Developer Investment Fund after City Hall research found that a 1 per cent increase in housing affordability could boost the capital’s economy by £7.3 billion over a 10-year period.

He backed the easing of constraints on local government to borrow to build — including providing certainty on Public Works Loan Board loans, which offer low-rate, long-term loans to councils — at the Centre for London’s annual conference.

He said: “It’s a given that affordable housing is an essential feature for any economy to thrive and grow.

“But in London, high house prices and rents relative to income are holding our economy back.

“And the new research we are publishing shows that affordable housing in London is absolutely critical if we are to realise our national growth ambitions.”