London's Future: A Reset for Living

Three shifts are happening at once.

First, planning reform is moving towards implementation with the Planning and Infrastructure Bill coming into law, an updated National Planning Policy Framework (NPPF) expected this summer, and a draft London Plan due in the near-term.

Second, the emergency housebuilding measures introduced in November have been tweaked through consultation in ways broadly supported by the market. The Greater London Authority (GLA) has now adopted the Housebuilding London Plan Guidance (LPG) with immediate effect, with some further measures requiring secondary legislation (local CIL relief and changes to GLA referral powers) so will take a little longer.

Third, public sector landowners are increasingly adopting partnership-led delivery models, bringing sites forward in structures that share risk rather than transferring it entirely to the developer.

For investors looking at the UK from abroad, that is the headline. Stoddart: “If I was an overseas investor, or somebody picking between asset classes, that policy direction is a strong signal, London is open for business, and it is an excellent opportunity to secure planning permissions.”

However, capacity constraints remain. Many boroughs lack the personnel resource to process increased application volumes at pace. While government reforms are intended to address this, planning capacity is likely to remain a key constraint on supply through the remainder of the decade.

The Government’s emergency housing measures, introduced in November and finalised after consultation, are the clearest near-term lever being pulled.

Key provisions include: a reduction in affordable housing requirements in order to be ‘fast tracked’ (20% on privately owned land), Community Infrastructure Levy relief, expanded Mayoral call-in powers, relaxation of density constraints, the late-stage review mechanism replaced by an early-stage review, and increased grant availability. Industry response has been broadly positive.

However, supply-side reform must work alongside viability realities. Cradick adds: “Build cost inflation has been significant over recent years years, up by roughly 30%. At the same time, the Building Safety Act has caused delays across the development process. We have also seen relentless taxation on the sector combined with the macro-economic impacts. As a result many sites remain unviable to deliver, so land availability is only part of the challenge.”

On the measures, Stoddart adds: “The reduction of the affordable thresholds recognises that enabling some delivery is better than nothing. The Government and the GLA ought to be commended for identifying solutions which introduce flexibility while maintaining appropriate safeguards.”

There is more optimism about the grey belt’s relevance to London as Stoddart explains: “It is significant. We have made several grey belt applications. The GLA has been engaged. It is a real change since the last London Plan, which essentially said the green belt would not be reviewed at all. A large number of green belt reviews are expected in the next couple of months, identifying where the grey belt sits and enabling targeted release. This should assist plan-making at both a local and regional level across London.”

The product type also matters. Grey belt delivers family housing at scale, on sites significantly more cost-effective to develop than high-density brownfield. 

There are other emerging policies that will support delivery across the capital. The draft NPPF proposes development outside settlements will be appropriate for development if it is within reasonable walking distance of a railway station which provides a high level of connectivity to jobs and services. With over 330 stations in London, this policy could have a materially positive impact on housing numbers.

There is a secondary opportunity in industrial land swaps. Where industrial estates within built-up areas of London are underperforming, grey belt land could absorb displaced industrial uses, particularly around Heathrow, freeing up inner sites for Living. Stoddart: “It is not just a binary question of delivering housing on the grey belt. It is about using the land system more intelligently and properly planning where areas are best served by employment or housing or combinations.”

Public sector landowners can be an important source of London development sites.

Cradick explains: “The big public sector landowners such as the NHS, the Ministry of Defence and Transport for London (TfL)recognise the value of their assets. However, onerous public procurement processes and a need to deliver 50% affordable housing on their sites, has constrained the ability for these sites to come forward.”

TfL’s approach has evolved in partnership with Places for London, its property branch. It has shifted to a more commercial strategy, selecting strategic partners and looking at more flexible deal structures to support delivery.

At Southwark station, Places for London is forward funding a student accommodation scheme in a joint venture with Helical Bar and intends to hold and operate the asset itself. Cradick comments: “That is a smart way of tackling the problem. They keep the income stream, and the site is delivered.”

The mechanisms to unlock London’s housing delivery are increasingly in place. Patient institutional capital is available and eager to deploy – as explored in our first release ‘The New Shape of Money: Who is really investing in London Living and why’.

The direction of travel is encouraging. Recent interventions, including the emergency measures and evolving grey belt policy, provide early guardrails for progress. However, more still needs to be done.

Maintaining momentum will be critical. Equally, stimulating demand will play a central role in translating improved policy into actual delivery. This will be explored in our third and final article.