London is delivering the fewest number of homes since the Second World War. Over the past two financial years, London has started just 15,040 homes in total. Over the same two years, London’s housing target was 175,984. That means housing starts were only 8.5% of the target, a truly dreadful figure. London’s housing shortage stands at around 1.85 million homes.
So the release of a new draft London Plan provides the perfect opportunity to turn around this miserable state of affairs and be radically pro-housebuilding. Has Sadiq Khan risen to this large challenge? Sadly, no. Some progress has been made, but the plan is a far cry from the ambition that is needed to solve London’s housing shortage.
Instead of planning for the annual target of 87,992 homes that the Government has set for London, the draft plan admits defeat instantly and only plans for 55,800 homes
First, he’s given himself a get out of jail free card for the housing targets. Instead of planning for the annual target of 87,992 homes that the Government has set for London, the draft plan admits defeat instantly and only plans for 55,800 homes. That means that even if, and this is a big if, the draft plan builds the homes it hopes to, London will still be at only 63% of its housing target.
One of the major causes of the construction slowdown was Khan’s high affordability requirements. In the 2021 London Plan, housing projects had to provide 35% of homes at subsidised rates or face a gruelling viability assessment process, which included three or more stages of review where any unexpected upside would be captured. Effectively, if the market conditions worsened, the developer was on the hook, but if they improved, the Mayor captured upside.
The stringent affordability requirements became such a significant brake on housebuilding that the Housing Secretary, Steve Reed, stepped in last autumn and forced Khan to implement an emergency housing package. This included lowering the requirements temporarily to 20% with the aim of making housebuilding easier.
In the new draft London Plan, the rate of 35% returns for Inner London and the dreaded viability reviews remain. The only slight positive is that Outer London, where house prices are lower and viability is more stretched, gets a slight reprieve with targets of 20% and 25% for certain boroughs. Still, this amounts to a step backwards compared to the emergency measures, when clearly the emergency of a lack of homes being built has not subsided.
A big opportunity for new land for housing in London is strategic industrial locations (SIL). There’s 2,293 hectares of SIL within walking distance of a Tube, train or tram stop in London. That’s 16 times larger than Hyde Park. This land is mostly single storey warehouses, which have been effectively banned from being converted into housing.
The new draft London Plan makes tepid steps towards letting homes be built on these well-connected sites. SIL land can only be released if it is among the highest levels of connectivity and it is not used for strategic or local needs or impacts any of the neighbouring industrial land. This drastically shrinks the amount of industrial land that qualifies for being converted into new housing, and limits the flexibility of how London’s land is used. And even if it is converted, it still faces high remediation costs and a subsidised housing target of 35%.
While the draft plan is thankfully only half the length of the existing London Plan, it sadly did not cut the number of policies that make building homes more expensive. Requirements to have private outdoor space, minimum space standards that are larger than what average Londoners can afford, and accessibility requirements which inadvertently bar some of London’s most beloved properties like mansion blocks from being built, all remain within the plan.
The new plan does not technically ban air conditioning, but it does provide significant burdens to its adoption in private homes. These include requirements to prioritise all passive measures, demonstrating need using expensive overheating assessments, and show how a design provides comfortable temperatures for everyone including those who cannot afford to use air conditioning.
But it is best not to be too negative, the plan does important work on making it easier to build on London’s overly-restrictive green belt. Some railway stations, like Crews Hill, are almost completely surrounded by the green belt, which means the trains are less useful than they could be. The plan makes the first initial steps towards releasing some of these sites, but high affordability requirements, set at 50% for green belt sites, threaten to make new development unviable. The draft plan also gives the initiative to local authorities to advance the green belt reforms, and these are the same local authorities that are militantly against building on the green belt.
At least one, unmitigated positive is the encouragement for al fresco dining in London’s town centres. So when this London Plan gets finally adopted in 2028, Londoners will be able to complain about the high cost of housing while enjoying a nice meal outside.
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