Comment

Homes for London: Increasing housing delivery in London over the next Mayoral term

As London’s Mayoral candidates prepare for polling day on 2 May, we set out our thoughts on how the delivery of new homes in the capital could be increased over the next Mayoral term. We advocate a renewed strategic focus to the next London Plan, as we move into an increasingly positive economic outlook which can support a step-change in housing delivery.

The backdrop

Critics of the Mayor find fault for low levels of housing delivery in London. Central Government too has been particularly critical of the Mayor, even if one allows  for party politics to have played it’s part. It is said by many seeking to deliver housing in London that it is challenging to bring forward viable schemes in a competitive land market, with laudable but stretching planning requirements, and within the context of a complex, time consuming and multi-tiered planning system.

A number of very public interventions have been made by Central Government in recent years, including:

> Michael Gove’s letter to the Mayor in March this year, raising concerns with housing delivery and setting out his view that industrial land could be a more significant source of supply. He also questioned the efficacy of the current approach to Opportunity Areas. He directed the Mayor, under provisions of the Greater London Authority Act, to review these specific policy areas.

> Government consultation in February 2024 regarding whether to increase the 150-unit threshold for referral of residential applications to the Mayor.

> The Government-commissioned ‘London Plan Review^[1]’ issued its report in February 2024, which considered the GLA’s role and recommended a presumption in favour of brownfield development, to cut through the multitude of policy provisions impacting on schemes in London.

> This review was announced within Michael Gove’s speech in December 2023, in which he also stated ‘Radical action is required in London, where the homes we need are simply not being built’ and highlighted his view that ‘the Mayor’s requirement for such a high percentage of affordable homes in every new development imposes such significant costs that in many cases development doesn’t go ahead at all’. 

> Robert Jenrick’s letter, as then SoS, in March 2020, relating to the ‘Intention to Publish’ London Plan, which referred to ‘added layers of complexity that will make development more difficult’.

For the Mayor’s part, during this period he has also been focused on housing supply, particularly affordable housing, with an upwards trend of starts and completions since the election in 2016. In 2022-23 there were over 25,658 GLA housing starts and 13,954 completions^[2]. He reconvened the London Housing Delivery Taskforce in August 2023 and previously commissioned the Kerslake Review in 2022, looking at recommendations to improve housing delivery, including on GLA-owned land. 

There are a number of positive steps in this respect, including the establishment of Places for London, taking a proactive role in delivering homes on TfL land. The current Mayor’s manifesto, released 18 April, includes a pledge to deliver 40,000 council homes by the end of the decade and to create Land Assembly Zones and additional Mayoral Development Corporations. It also refers to an expanded City Hall development function with integrated governance with Places for London.

Housing delivery has been the key focus of the Government interventions, together with a common theme of reflecting on the strategic role of the GLA.  In this respect it’s worth remembering that the London Plan is the Spatial Development Strategy for Greater London.  In effect, this is a remnant of the Regional Spatial Strategies structure that was abolished in 2010.

Whilst the presumption recommended by the London Plan Review represents a pragmatic approach to enable a decision-maker to cut though complex policy requirements, there is an opportunity for the next London Plan to respond to the issues identified in the Review. The London Plan sets the strategic direction and has a key role in ensuring that London’s land capacity is fully explored, and the conditions are in place to support delivery of housing. There is also a risk of the presumption only biting at appeal, which could blunt its teeth in reality, given the time, cost and on-going planning risk associated with the appeal process.

How a potential change in national Government may impact on the relationship between City Hall and Westminster remains to be seen but both the main parties appear agreed on the need to deliver more homes urgently, which requires a step-change in delivery. Indeed, Labour’s current proposals include a target of 1.5 million homes nationally over the next Parliament and ‘a blitz of planning reform to quickly boost housebuilding’.

Housing delivery in London

The London Plan Review sets out some compelling data on delivery proportionate to the existing stock, which has ‘been more modest in London than England and significantly less than the growth experienced in the other four largest cities^[3]’ . This, in spite of the London Plan comprising a recently adopted strategic plan which advocates ‘Good Growth’ and sets housing targets. 

London has been affected by adverse economic conditions and a challenging land market but is not unique in this respect.  The performance of London’s housing delivery can also, in part, be attributed to a demanding planning environment relative to other locations, including with regards to affordable housing requirements.  It is also argued by some that the planning environment in London has never been more complex, in terms of the scope of policy, whilst the under-resourcing of planning departments makes effective implementation hugely challenging.  It could be argued that there would be a general benefit to a simpler approach and one where the role of the GLA and Local Authorities is more distinct.

London’s housing delivery is a critical issue for those who live and work within the London Boroughs, including commuters from surrounding areas. Beyond access to housing itself, ensuring a sustainable and mobile labour market is a pressing challenge for London’s businesses, significantly affected by the availability of suitable housing. 

Housing targets 

The London Plan baked-in a capacity-constrained housing target. According to the 2017 SHMA which under-pins the adopted Plan, actual housing need in London was 66,000 homes per annum, rather than the adopted target of c. 52,000. This also means that other policy requirements of the Plan, such as the approach to density and optimisation, have been tested against their impact on delivery below actual need.

The London Plan Examiners were concerned about the approach to housing supply and considered whether ‘the failure to meet, by some margin, the identified annual need’ should result in the Plan being paused or withdrawn, for further work to be undertaken. Ultimately, the Examiners considered a delay in adopting the plan would further depress delivery and proceeded to allow adoption^[4]. 

More recently, the Government’s ‘urban uplift’ increases London’s ‘Standard Method’ housing need figure to just under 100,000 homes per annum, nearly double the London Plan target, though of course the current London Plan housing target acts as a shield to these changes at this time.

Housing capacity

The London Plan Review concluded that there is significant developable land capacity remaining within London, given housing delivery has fallen short of the capacity-based housing target. This was the basis for the recommendation of the report’s authors for a presumption in favour of developing on brownfield land. 

With respect to brownfield land, the London Plan Examiners identified potential for additional residential capacity within employment land, which could be unlocked through a plan-led approach. This point was also a key focus in Michael Gove’s recent letter to the Mayor in March this year.

We have, on behalf of NEAT Developments and BlackRock, successfully advocated for planned intensification, and co-location of residential and industrial land within designated industrial land at Blackhorse Lane with the support of the GLA and, in that case, LB Waltham Forest. It is important that creative and constructive approaches are deployed to make best use of land in London and we consider that the co-location of both uses has the ability to provide a significant source of supply whilst retaining or indeed intensifying industrial capacity. Our figures show that, from January 2019 – December 2023, 29,688 homes have been approved or are the subject of a pending planning decision for homes within GLA referable co-location schemes.

Employment land is one potential source of supply. Publicly-owned land and assets are also a huge part of the solution and the London Plan Review is clear that measures such as the Brownfield Land Register are not working effectively. Whilst positive steps have been taken, such as proactive use of TfL land, there is an opportunity to do much more over the next Mayoral term, including ensuring the Brownfield Land Register is comprehensive. We advocate clear housing capacity targets, with mechanisms and timescales for delivery on all public-sector land, including at GLA and Borough level. More detail is required to understand the role of proposed Land Assembly Zones and additional Mayoral Development Corporations, set out in the current Mayor’s manifesto.

Michael Gove’s March 2024 letter also set out that, in his view, delivery in Opportunity Areas has not been sufficient. The GLA’s role in proactively planning for these areas continues to be a valuable area of focus.

There is, of course, also the troubled question of the Green Belt, with certain boroughs (Enfield a notable example) already considering some bold approaches in that respect. We will wait to see what, if elected, an incoming Labour Government might do in this respect, with early indications of a bolder approach. In order to ensure a robust basis for any prospective Green Belt release, however, there must be a comprehensive review of London’s brownfield development capacity.

The wider South-East

London is not an island, and the functional housing market and wider economy encompasses a much wider geographic area across the South East of England and beyond. Whilst the substantial capacity for development in London must be fully utilised to accommodate the capital’s own needs, a housing need figure of 66,000 or even 100,000 homes per annum represents a perhaps disproportionate part of the national housing supply target, underlining the scale of the challenge for the London Boroughs alone.

The London Plan Examiners and the SoS both highlighted that a part of the solution to London’s housing crisis should be to review housing delivery across the South-East in a co-ordinated manner, with authorities outside London contributing towards unmet needs. This would require an effective approach to co-operation between authorities, which has so far proved to be an elusive goal.

Conclusions

Reflecting on the above, our key asks of the Mayor of London, in the next Mayoral term, are:

• The next London Plan should be a plan to meet actual housing need in full.
• Policy requirements should facilitate delivery against actual need, ensuring viable delivery across the Plan period, including during difficult economic periods.
• Targets within London should be based on a full exploration of suitable deliverable sites, this should include:

1.  Using best practice regarding industrial and residential co-location to understand potential residential capacity.
2. Proactively and comprehensively assessing the capacity of public sector land and setting out housing delivery targets and timescales.

• Should housing need prove to be greater than identified capacity, on a robust assessment (plus a reasonable windfall allowance) a co-operative approach to meeting this additional need within surrounding Local Authorities in the wider South-East should be undertaken.
• The focus of the next London Plan should reflect its status as a strategic planning tool, focusing primarily on strategic matters including land supply and the delivery of homes.

For more information please contact Oliver Jefferson.

23 April 2024

[1] London Plan Review: Report of Expert Advisers, 15 January 2024

[2] GLA Affordable Housing statistics: GLA Housing Starts on Site and Completions

[3] Ibid, Figure 3.1

[4] Report of the Examination in Public of the London Plan 2019, Planning Inspectorate, 8 October 2019