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Many may not be familiar with what the new draft London Plan or Spatial Development Strategy really means for the capital, however, this document will play an important role in shaping what London will look like in the next 20-25 years and where the opportunities exist for property investors and developers.


The new plan, underpinned by the concept of Good Growth, sets out policies that will inform planning decisions in the UK capital. It aims to ensure that London is equipped with affordable new homes, workspaces and better-connected infrastructure to accommodate its growing population, set to increase by 70,000 every year.


One of the cornerstones of the London Plan is the creation of an additional 65,000 new homes every year, half of which will have to be genuinely affordable to meet the needs of Londoners. This marks a drastic shift from the previous target of 42,000 homes and is one of the more controversial aspects of the draft plan.


Developers in London have long been able to negotiate down the affordable housing element in private schemes, arguing its impact to the financial viability of their proposals. Pro-regeneration local authorities that have been open to private sector investment in recent years have been lenient and we have seen a number of developments granted planning consent well below policy compliant levels.


This London Plan has been designed to make this more difficult, which will have far reaching consequences for the residential development sector in the capital. Should the plan go ahead, we are likely to see developers re-work existing development plans to create denser and taller schemes so they are financially viable. Others may look outside of the capital to regions where land is far less expensive than London. As a result, private sector development in London could stall for most developers. Housing associations, being the exception.


Fortuitously, housing associations building homes in the capital will find themselves with a unique competitive edge. The way housing associations are funded and their ability to subsidise affordable units will help to make building schemes with a high number of affordable units in London more viable. Over the last five years we have seen a number of London’s biggest turn their hand to private development and are building homes on a large scale. As private sector developers compete less for land and development, we could see much more of London’s new homes coming from these housing associations.


However, the plan does come with incentives for housebuilders to increase the share of affordable homes in their developments. Those developers who meet a minimum of 35 per cent affordable housing threshold without public funding, will be able to access a fast-track route through the planning process. This means that in some cases, developers will be able to bypass expensive and lengthy viability negotiations. It will also enable them to avoid challenging review mechanisms which can cause difficulties when trying to sell a site with such clauses.


Some business organisations have expressed their concerns about developers’ ability to reach this threshold, while sticking to a prescribed split of affordable housing options[1], which can be more difficult to achieve in some boroughs than others. The extent to which this is practically achievable is yet to be determined.


Strained financial viability and new plans to scrap density limits means that London will face housing intensification through redevelopment. This will involve the creation of living spaces around or on top of transport hubs and retail parks, enabling architects to unleash their creativity and carve out a new skyline for London. This new, design-led approach places responsibility for the development of new planning policies on each London borough. This will require significant in-house expertise and resource – which were among the concerns voiced following the publication of the draft plan.


According to the Mayor’s vision, another way of increasing housing supply is through the use of small sites for development. According to the draft plan, London has the capacity for the development of around 24,500 new homes on small sites adjacent to existing buildings every year, with targets set for every borough.


The fresh focus on these sites, capable of developing between 1 and 25 homes, can potentially enable small and medium-sized housebuilders to create more new homes. It is important to note, however, that not all homes on small sites are to be constructed from scratch – some properties will be created through the conversion, extension or rebuilding of existing homes. To suggest this is a new vision is an overstatement, as I am sure many SME developers would agree. There also maybe issues around delivery as the challenge for many SME housebuilders is the planning process; would they rather put in one application for a large number of units rather than multiple applications on a number of small sites?


The increased planning density represents new opportunities for the business space sector. The UK capital, an attractive destination for creative minds and savvy entrepreneurs, is in need of lower-cost and affordable spaces to accommodate micro, small and medium-sized businesses. These can be incorporated in new residential and mixed-use developments, allowing for the creation of cohesive communities and promoting local businesses.



If you would like to get in touch with Rob, please contact him: or +44 (0)207 344 2669