Urgent action will be needed in London to avert a downturn in new affordable housing if Brexit fears continue to see developers put projects on hold, the capital’s mayor has warned.

In a joint letter to housing secretary James Brokenshire, London mayor Sadiq Khan, the capital’s councils and the G15 group of London housing associations said it was clear developers were “holding back” on new projects, leading to a loss of affordable housing “given that around 20% of affordable supply is generated through S106 agreements”.

The G15 and the Greater London Authority (GLA) has calculated that if sales of private homes were to slump after the UK leaves the EU next month compensation required for the lost cross-subsidy that otherwise would have funded the delivery of affordable properties would amount to £5.2bn.