For developers, investors and landowners, the proposed changes could have significant implications for scheme viability at a time when the sector continues to grapple with rising development costs, increased regulatory requirements and challenging market conditions.

The Threshold Approach

The current framework is rooted in the London Plan 2021, which introduced the Threshold Approach for affordable housing delivery. Under this approach, schemes are expected to provide 35% affordable housing on private sector land and 50% on public sector land in order to access the Fast Track Route. Schemes that fall below these thresholds are subject to detailed viability scrutiny by both the local planning authority (LPA) and the Greater London Authority (GLA), as well as a requirement for late-stage viability review mechanisms.

The Threshold Approach was designed to streamline the planning process, provide greater certainty for developers and maximise affordable housing delivery. While these objectives remain important, housing delivery in London has continued to fall significantly short of targets in recent years. Although there are numerous reasons for this, including construction cost inflation, changing financing conditions and evolving regulatory requirements, many developers argue that the rigidity of the existing affordable housing framework has become an increasing constraint on scheme viability and deliverability.

Understanding the significance of the Draft London Plan requires more than a comparison with the 2021 Plan alone. Since its adoption, a series of policy updates, practice notes and emergency interventions have reshaped the affordable housing and viability landscape. Together, they provide important context for assessing whether the Draft London Plan represents a genuine shift in direction or simply an evolution of the existing approach.

The road to 2026

Since the adoption of the current London Plan in 2021, developers have had to navigate not only the Threshold Approach itself, but also a series of policy and guidance updates introduced against a backdrop of rising construction costs, increasing fire safety requirements and a weaker residential sales market. Taken together, these changes have shaped how affordable housing and viability have evolved in London.

Key milestones have included:

• 2023: Draft Affordable Housing and Development Viability. Published at a time when development viability across London was under significant pressure, the draft London Plan Guidance (LPG) appeared largely disconnected from prevailing market conditions. Rather than introducing measures to improve scheme deliverability, it proposed a more complex and prescriptive approach to viability assessments. Fortunately for many in the development industry, following consultation between May and July 2023, the guidance was never finalised or formally adopted.

• 2024: Accelerating Housing Delivery Planning and Housing Practice Note. Published in December 2024, this practice note sought to increase Social Rent delivery and better align affordable housing proposals with registered providers' (RPs) requirements. While this represented a welcome acknowledgement of changing RP appetite and market realities, it ultimately fell short of many stakeholders' expectations. In particular, it offered little in the way of meaningful viability support, with much of its focus centred on achieving 'equivalency' with the existing London Plan affordable housing thresholds.

• 2026: Support for Housebuilding. Following consultation between November 2025 and January 2026, the Support for Housebuilding LPG was published in March 2026. A significant shift in approach, the guidance introduced a package of temporary emergency measures aimed at unlocking stalled housing schemes, including:

• A new Fast Track route at 20% affordable housing on private sector land and 35% on public sector land, allowing qualifying schemes to bypass viability testing and avoid late-stage viability review mechanisms.
• Between 50% and 80% local Community Infrastructure Levy (CIL) relief for schemes delivering between 20% and 35% affordable housing. Consultation on the proposed CIL relief remains open until 18 September. While the principle of CIL relief has been widely welcomed, further clarity is needed on the practical requirements for securing the relief.
• Grant funding at fixed rates for every affordable home delivered above the initial 10% affordable housing provision, where schemes provide at least 20% affordable housing overall.

The emergency measures set out in the 2026 LPG are already being explored by many developers seeking to bring forward stalled sites. However, their impact may prove limited. The measures are temporary in nature and do little to address the longer-term viability challenges facing the sector. In addition, a number of London boroughs have publicly opposed the guidance, with a High Court judicial review now underway. This has created further uncertainty over the extent to which the measures can be relied upon in practice.

Against this backdrop, attention is increasingly shifting towards the Draft London Plan and the extent to which it will provide a more permanent solution to London's housing delivery and viability challenges.

A positive change?

Savills has reviewed the affordable housing policies within the Draft London Plan and summarised the key differences between the draft policies and the current policy and guidance framework in our policy matrix, which can be viewed here.

At first glance, there is much for developers to welcome. The introduction of variable Fast Track thresholds based on location and land profile for schemes of 36 homes or more represents a significant departure from the one-size-fits-all approach of the London Plan 2021. Equally encouraging is the proposed 20% affordable housing Fast Track threshold for small sites delivering between 10 and 35 homes across London.

The greater flexibility proposed for alternative living sectors is also pleasing. In particular, the ability for Purpose-Built Student Accommodation (PBSA) schemes to provide Affordable Student Accommodation (ASA), traditional on-site C3 affordable housing and/or a payment in lieu while remaining policy compliant and eligible for the Fast Track Route acknowledges the diverse nature of London's housing delivery landscape.

While the direction of travel is positive, several important questions remain. A number of the proposals leave uncertainty around deliverability, viability and the practical operation of the new policy framework. Ultimately, the effectiveness of the reforms will be judged by whether they unlock sites and support increased housing delivery.

Over the coming weeks, we will be exploring the Draft London Plan's affordable housing policies in more detail, examining both the opportunities and challenges presented by the proposed changes. As the consultation progresses, there are several areas we have initially identified where further clarification or refinement may be beneficial:

• Some of the assumptions in the evidence base appear to be optimistic, and may ultimately be out of date by the time the new London Plan is implemented in 2028. Therefore, are the new thresholds low enough to ensure schemes are viable?

• Do the affordable policy changes from 2021 go as far as they could? For instance, no CIL relief is offered and, as it stands, we understand that grant funding from the Affordable Housing Programme (AHP) 2026-36 will be applicable to ‘additional’ affordable homes outside of the Section 106 agreement only. This represents a step backwards from the Support for Housebuilding LPG (2026).

• Does Equivalency (in line with the 2024 practice note) remain an acceptable principle or are the tenure alterations set out in draft Policy HN3 the only alternative route to achieving policy compliance?

• Greater flexibility for small sites (10-35 homes) to pursue a payment in lieu or single affordable tenure should be explicitly incorporated into policy to ensure smaller sites are deliverable.

• We question the GLA’s continued approach to calculating payments in lieu. This approach may ultimately lead developers to pursue a viability tested route, as the differential in development costs is not recognised within the calculations. As a result, policy-compliant payments in lieu may be overstated, placing significant pressure on developers’ cashflows.

• The AHP 2026-36 guidance states that only ‘additional’ affordable homes (above what could be secured through the planning system alone) will be eligible for grant funding. However, the London Plan 2021 clearly stated that, in order to follow the Fast Track Route, schemes must "meet or exceed the relevant threshold level of affordable housing on site without public subsidy". There is no equivalent reference to public subsidy or grant funding within the Draft London Plan 2026. Therefore, will schemes continue to be able to utilise grant funding on Section 106 affordable housing while remaining eligible for the Fast Track Route once the emergency measures lapse?

• Despite the introduction of variable Fast Track thresholds, if schemes remain unviable at those levels, developers will continue to viability test schemes and, as a result, remain subject to late stage review mechanisms, potentially undermining scheme deliverability.  

The consultation provides an important opportunity for developers, landowners and stakeholders to help shape London's next planning framework. Engagement is key.

Further information

Contact Harry Wackett or Diana Thomson