Recent exchanges between the Secretary of State for Levelling Up, Housing and Communities Michael Gove and Mayor of London Sadiq Khan have inevitably shone a spotlight on the long-debated topic of housing delivery across the capital.

Housing shortfalls in London

The December 2023 Housing Delivery Test (HDT) results show that 22 London authorities* failed to meet their individual housing delivery targets between 2019 and 2022. Of these, 13 fell at least 25% below their mandated housing delivery requirements.

Savills English Housing Supply Update Q4 2023 also suggests that when measured against Standard Methodology requirements, London boroughs cumulatively delivered just 40% of the capital’s required housing need across the year to Q4 2023. 

Underlying data identifies correlating trends across the development sector in London which may partly explain the shortfalls. Research undertaken by Savills** shows that as of Q4 2023, the volume of planning applications submitted in London was down 22% against the previous year. Over the same period, the number of planning permissions dropped 34% against the previous year, with starts also down 29% comparatively.

The role of market conditions and ‘policy inflation’

Market conditions are inevitably playing a role in the capital’s housing delivery shortfalls, with build cost inflation beginning to stabilise albeit at a significantly higher rate, along with a higher cost of debt impacting viability and deliverability. Local authority resourcing issues present another topical constraint which is naturally impacting the planning application timescales nationwide.

‘Policy inflation’ is also seen to be contributing to the headline deficits identified above. National reforms such as the proposed Infrastructure Levy tax and Biodiversity Net Gain, along with a raft of regional policy requirements set out in the London Plan and its guidance documents, add layers of complexity to the planning and development process.

The London Plan Review

The role of the London Plan in facilitating housing delivery across London was examined within the recently published London Plan Review, an independent report prepared on behalf of Michael Gove. The review acknowledges that “there are a multiplicity of factors causing housing undersupply in the capital” but concludes that, in regard to the effectiveness of the London Plan:

“…there is persuasive evidence that the combined effect of the multiplicity of policies in the London Plan work to frustrate rather than facilitate the delivery of new homes on brownfield sites, not least in terms of creating very real challenges to viability. There is just so much to navigate and negotiate that it should come as no surprise that wending one’s way through the application process is expensive and time-consuming”.

To this end, the review recommends the introduction of a strong policy presumption in favour of residential development on brownfield land, proposed to be introduced as a strategic policy in a future iteration of the London Plan. Alternative courses of action such as producing a standalone Written Ministerial Statement or additions to Planning Practice Guidance were also recommended.

Residential development on brownfield land

The recommendations of the review coincide with a national policy consultation launched by the Department for Levelling Up, Housing and Communities (DLUHC) in February 2024. Titled ‘Strengthening planning policy for brownfield development’, the consultation seeks feedback on how national planning policy can be strengthened in order to support the Government’s approach to brownfield land. A further DLUHC consultation on amending particular permitted development rights is also currently ongoing, including proposed changes to enable the upward extension of a range of existing buildings and proposed changes to rights for the demolition and rebuild of certain buildings as homes. This demonstrates that London is not alone in suffering from undersupply issues, which the Government is seeking to address nationwide.

The strengthened promotion of brownfield residential redevelopment via the policy mechanisms discussed above is likely to be welcomed in principle across the development sector. However, it remains to be seen whether such a strong presumption in favour would speed up planning approvals when LPAs assess proposals against national, regional and local policy requirements including design standards, affordable housing and other material considerations. We expect such balancing exercises to be rigorously tested at appeal stage.

Following receipt of the London Plan Review, Sadiq Khan recently suggested that the process was “nothing more than a stunt from the Government to distract from their abysmal record of failure”, further stating that housing delivery across London has reached its highest level since the 1930s. Therefore, it remains to be seen whether the mayor will consider implementing the recommended strong policy presumption within any future GLA-led review of the London Plan, or if the findings of the London Plan Review will be disregarded.

*(including both the London Legacy and Old Oak and Park Common Development Corporations)

**Source: Savills using Molior Q4 2023 data: sites more than 20 homes, incremental applications and permissions

Further information

Contact Jack Conroy or Matt Richards