Labour-led Brent and Barking & Dagenham LBCs are understood to have failed to get anything from the first round of Whitehall's £39bn affordable housing fund.
It comes as the Greater London Authority (GLA) admitted that demand for the main capital grant for reviving council housebuilding ‘significantly exceeds the funding available'.
London boroughs said they needed £12.3bn in grant funding to unlock a pipeline of more than 50,000 council homes but the Social and Affordable Homes Programme (SAHP) is currently only worth £11.7bn from 2026 to 2036.
The GLA privately wrote to bidders earlier this month offering more than £6bn, with around £5bn still to be allocated. It said it would not publish allocations until later this year.
Brent's leader Cllr Muhammed Butt declined to confirm his council had lost out but added: ‘If it is confirmed that Brent has received no funding for the next stage of this programme that would be bitterly disappointing.
‘Brent has proudly and consistently led the way in delivering new council and affordable homes for years, going above and beyond to top the leaderboard for most homes built of any London borough this financial year. There remains an urgent need for additional affordable housing in the capital, and we would expect that record of delivery and ambition to be recognised and supported.'
Butt said Brent would ‘consider all available options once the funding decisions are in the public domain'.
A spokesperson for Barking & Dagenham said: ‘We have been advised by the GLA to treat the outcomes as confidential, and we are honouring this.'
Labour-led London Councils called for further grant funding to ‘accelerate progress and maximise delivery of boroughs' council housebuilding ambitions'.
London Councils' executive member for housing and homelessness Cllr Anthony Okereke said: ‘Boroughs want to build more.'
An early ‘bold' vision for reform from local government, which is still subject to final cross-party sign off, called for ‘greater certainty in affordable housing funding programmes by introducing more transparent, consistent criteria and by revising grant levels available per unit through the SAHP'.
A report published this week by think-tank Prosper UK's housing commission, chaired by former housing minister Lord Barwell, found social and affordable housing starts in London fell from 26,386 in 2022-23 to 4,522 in 2024-25.
In a statement, a spokesperson for Mayor of London Sir Sadiq Khan said the £11.7bn was the ‘biggest affordable housing settlement London has ever received, but the strength of the bids means demand significantly exceeds the funding available at this stage'.
The statement added: ‘We recognise some partners will be disappointed with the outcome, and we will continue working closely with Government, councils and other housing providers to deliver the affordable homes that Londoners desperately need.'
