How London's Vienna-style social housing model will work - as Khan launches 1.5bn fund to boost housebuilding

"City Hall has launched a massive 1.5 billion intervention to rescue London's stalled housing market, deploying ultra-low interest loans to replicate Vienna's gold-standard social housing model, City Hall has announced. Deputy Mayor of London Tom Copley said the low-interest loans have echoes of Vienna's renowned social housing funding model. The Austrian capital's strategy is globally renowned for its financial stability and affordability."

"There are 182 Limited-Profit Housing Associations social housing providers allowed to turn a small profit which own around 40 per cent of homes for rent in the city. These are then mandated to provide rental accommodation at rates typically 25 per cent below market value, ensuring properties aren't out of reach for lower and middle-income residents. In 2023, the average rent per square metre in Vienna was 10.50, according to analysis from consultants Deloitte,"

"while Londoners were paying well over 30 per square metre, the highest in Europe. Developers receive subsidies to enable them to keep fixed costs and rents at a lower level, with a low-interest loan covering more than a third of construction costs. Other funding for social housing construction in Vienna comes from a 0.5 per cent payroll tax for both employee and employer, which raises hundreds of millions per year."

City Hall launched a 1.5 billion intervention deploying ultra-low interest loans to replicate Vienna's social housing funding model. Deputy Mayor Tom Copley linked the loans to Vienna's approach, noted for financial stability and affordability. Vienna relies on 182 Limited-Profit Housing Associations that own around 40% of rental homes and mandate rents typically 25% below market value. In 2023 average rent per square metre in Vienna was 10.50, compared with over 30 per square metre in London. Vienna funds construction with subsidies, low-interest loans covering more than a third of costs, and a 0.5% payroll tax shared by employers and employees. London has faced much higher developer borrowing costs, reaching up to 12% in 2026. City Hall described the move as the most aggressive social housing step in years and paired it with upcoming rent convergence reforms.

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