The scale of the challenge

London’s housing crisis is deepening, with private starts on site dropping 44% in 2023-24 versus 2022-23, and affordable housing starts plummeting 84% during the same period. With private* and affordable starts combined reaching just 14% of the government’s 88,000-home annual target, the gap between housing need and delivery is widening.

The consultation paper acknowledges the lag in securing planning permissions and delivery of homes. There are 200,000 consented homes in Opportunity Areas alone which have not yet been built. This brings into stark contrast the difference between unimplementable planning permissions and deliverable planning permissions. Quite simply, to be able to get anywhere close to delivering the number of homes London needs, there has to be a significant increase in the number of deliverable planning permissions secured.

The scale of this challenge seems to be understood by the Mayor, and there are encouraging signs that the new London Plan will promote the flexibility needed. A ‘streamlined and focused’ London Plan will be welcomed by the industry, but there needs to be genuine action to make local planning more flexible. There is clearly a mandate from the government to accelerate delivery, but we are yet to see this step change in action.

What homes, where?

The new London Plan will still advocate a brownfield-first approach, but it is acknowledged that this alone will not be enough to meet the capital’s housing targets. The strategic release of Green Belt, introduced in the updated National Planning Policy Framework (NPPF) at the end of last year will be key for London. 

In this consultation draft, the Mayor introduces the concept of large scale development (10,000+ homes) in the Green Belt in locations with good access to public transport. This will need much more collaborative working across boroughs.   

Investment in public transport more generally is also observed to be key in unlocking sites. Building at higher densities and ensuring boroughs allocate sites for tall buildings should also allow the development potential of sites to be optimised.

The consultation paper makes it very clear that the priority is the delivery of affordable homes. The role that Build to Rent and co-living products can have in boosting housing delivery is also acknowledged in the consultation paper, which will be welcomed by many.

The viability challenge

The consultation indicates that the Mayor is trying to balance the financial pressures that are inhibiting delivery alongside the need to build affordable homes. Overall, the tone is refreshing and it appears that the Mayor is open to discussing potential solutions with the wider marketplace.

The biggest element of affordable policy is the Fast-Track thresholds, which the GLA sees as having secured a greater proportion of affordable homes in recent years. But since consents have not lately translated into delivery, the document acknowledges the need for ‘careful balancing of ambition and practical implementation’. With this in mind, the new plan will review the thresholds to ‘make sure that they still provide the right incentives to support affordable housing needs and delivery’.

Alongside the review of thresholds, the new London Plan will consider whether ‘some types of development are very challenging to deliver’ which we hope is further indication of a pragmatic approach to the challenges of development.

There appears to be a more assertive stance to delivery, with the Mayor acknowledging that the current 10-unit threshold (before affordable is required) ‘may cause sites not to be optimised’ and ‘can have a disproportionate cost in terms of value and delay to the planning application process’. It’s long been the case that smaller amounts of affordable housing are inefficient for most Registered Providers and we welcome the Mayor’s consideration of what may be appropriate for the specific circumstances of housing in London. However, it remains to be seen whether the GLA can deviate from a long-established national policy threshold.

Since the policies for the new London Plan will be viability-tested, we hope this implies that the new plan will have increased flexibility, depending on the challenges faced by different projects in varying locations.

Conclusion

As set out in the consultation draft for the new London Plan, London's population has grown by 1.5 million over the last 20 years. It is expected to rise by another million over the period to be covered by the plan. Getting ahead of the curve to deliver a very significant increase in deliverable planning permissions is so desperately needed to address not just the current chronic shortfall in homes, but to enable the capital to continue to thrive and grow. We will need the industry to engage with the Mayor throughout the preparation of the new London Plan to ensure the new policy context is flexible enough to allow this to happen.

* Private starts are from Molior, and exclude small sites

Further information

Contact Diana Thomson or Gareth Turner