As London’s housing crisis deepens, pressure is mounting on Sir Sadiq Khan to reduce his 35 per cent affordable housing requirement for new private developments to help revive home building in the capital, now at a record low.
Could a dramatic City Hall announcement be imminent? That was certainly the expectation among development professionals at the Shaping London’s Future conference held by leading planning chambers Landmark last week “Everyone is waiting for the GLA (Greater London Authority) announcement,” said one attendee as the session began.
That made Jules Pipe, Sir Sadiq’s deputy for planning and overseer of the London Plan, the Mayor’s long-term blueprint for development in the capital, something of a star attraction. And while participants may have been disappointed not to hear specific pledges from him, Pipe suggested there isn’t long to wait. There was an “increasing sense of urgency” as development ground to a halt, he said, with City Hall working with government on “immediate measures”.
Speakers set out the now familiar cocktail of challenges which, according to Tom Dobson of planning consultancy Quod, meant that in the coming period “most developers aren’t going to be building very much”. Soaring costs, high inflation and interest rates and falling sales, coupled with the pressures of new building safety rules and the demand to provide high levels of affordable housing, new infrastructure and other public provision, were all making schemes increasingly unviable.
Two recent schemes were highlighted, the 1,000 home Stag Brewery development in Mortlake and the 52-storey, 434 home Cuba Street scheme at Canary Wharf, where developers had successfully argued for large reductions in an initial 30 per cent affordable home provision, to enable works to proceed. Meanwhile, as Pipe himself pointed out, no work has begun on thousands of potential homes in the capital for which there is planning permission because of similar viability concerns.
With homelessness increasing, the situation is all the more acute because affordable housing built by private developers under “Section 106” agreements with boroughs, in return for planning permission, makes up more than half of the total affordable supply in the city.
More homes in London were also critical for UK economic growth, said Landmark KC Rupert Warren, while his colleague Zack Simons KC pointed out that with the capital allocated almost one in four of new homes in government plans, there would be “no hope” of reaching that target “unless London does its bit”. The Mayor’s London Plan, added fellow KC Russell Harris, must “become a delivery machine…because if it doesn’t, no-one else will”.
“I’m very alive to the reality of development in the current climate,” said Pipe. “We recognise the viability challenge, and the Mayor is serious about kick-starting development in London.” Short-term measures that might initially focus on helping unlock stalled sites and “make those permissions a reality” were in train, he said.
Pipe added that viability challenges were not all due to City Hall and borough planning rules and other regulations. Wider economic pressures were in play, and more investment in transport – particularly City Hall’s top three proposals, for the Bakerloo line and Docklands Light Railway extensions and the new West London orbital line – was vital for meeting the city’s 10-year 880,000 home target.
But he also accepted that for potential new development what had been a flagship, and initially successful, Khan policy, offering a “fast track” through the planning process in return for 35 per cent affordable housing, was no longer delivering. And changes brought in by City Hall at the end of last year, designed to speed up delivery by allowing more flexibility on the type of affordable housing provided, had “not been enough”.
The Mayor would now be “increasingly active” in exercising his power to “call in” major planning applications and take over decision-making from the borough in order to push schemes through, Pipe promised. But beyond that, what could the emergency City Hall guidance, which is now clearly expected – perhaps in the next few days, according to some observers – look like?
Pushing that 35 per cent threshold down is the main demand, with viability expert James Brierley, from the Newmark consultancy putting his money on a reduction to 20 per cent. “Developers want to build, and schemes should provide what they can and maximise the amount of affordable housing, recognising that affordable delivery is the government focus,” he said. “But we need a bit of pragmatism and realism.”
Simons highlighted what he said was the “biggest constraint” on housebuilding in London, its extensive Green Belt, covering 22 per cent of the city’s land area. The government’s changes to planning rules allowing some release of Green Belt land, alongside strict affordable quotas, was a “once in a generation” opportunity to get building, he said, and urged developers to “strike while the iron is hot”.
Follow Charles Wright on Bluesky. Photo: New homes at Brent Cross Town.
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