The Aylesham Centre decision and the system that has learned to celebrate delivering nothing

“This is a great day for Peckham.”

That was Southwark Council, on 18 May 2026, responding to the Planning Inspectorate’s decision to refuse Berkeley Homes’ appeal for the redevelopment of the Aylesham Centre on Rye Lane.

Zero homes. Zero affordable housing. The clocktower intact. Southwark high fiving.

This is what the system looks like when it works as designed.

To hit Labour’s housing targets in London, work needs to start on 22,000 new homes every quarter. Data from Molior, the residential development consultancy, shows 2,103 residential starts in the first three months of 2026. The Aylesham Centre would have contributed 867 of the 19,897 that didn’t happen.

What the decision says

Inspector M Shrigley dismissed Berkeley’s appeal for the demolition and phased redevelopment of the Aylesham Centre — a site allocated for redevelopment in the Southwark Plan for years, with an indicative capacity of 850 homes. The proposed scheme would have delivered 867 homes including 77 affordable, a replacement supermarket, flexible retail, workspace and leisure uses on one of south London’s most prominent brownfield town centre sites. 

The Inspector refused it primarily on heritage grounds. Proposed Blocks A, B and C — rising seven storeys along the Rye Lane frontage — would, he found, cause less than substantial harm to the Rye Lane Peckham Conservation Area. They would be “out of scale, visually intrusive and unduly diminishing to the clocktower and 47-49 Rye Lane.” Block L, rising ten to eleven storeys facing the bus station, he found “monolithic and unrelenting.” The combined heritage harm to the conservation area, two grade II listed buildings, and a series of locally listed assets was, in aggregate, less than substantial — the lower of the two harm thresholds in the National Planning Policy Framework.

Less than substantial harm. And it was sufficient to refuse 867 homes on a site the council itself designated for housing development.

The Framework requires decision-makers to weigh that harm against the public benefits of the proposal. The Inspector acknowledged those benefits were considerable: delivery of a long-allocated site, 867 new homes including family provision and wheelchair-accessible units, 89.91% Biodiversity Net Gain, new jobs, pedestrian permeability improvements, renewable energy, and — as he explicitly noted — the context of emergency measures announced by government in October 2025 to accelerate housebuilding in London. He gave them substantial collective weight.

It was not enough. The clocktower won.

The number Southwark’s press release did not mention

Before the heritage question, there is a number that belongs at the front of this article rather than buried in paragraph 73 of the Inspector’s decision.

Following a robust financial assessment, Southwark’s own viability team concurred that the maximum affordable housing this scheme could deliver — given construction costs, the phased eight-year build programme, and the scheme’s risk profile — was zero percent. Not twelve percent. Not thirty-five percent. Zero. The Inspector accepted this and found no harm in Berkeley’s offer of twelve percent, explicitly because it exceeded what viability could support.

Berkeley offered seventy-seven affordable homes as a commercial undertaking, carrying the financial risk on a scheme that the agreed appraisals showed running at a £70 million deficit.  So the choice before the planning system on 18 May was not between twelve percent affordable housing and thirty-five percent affordable housing. It was between twelve percent affordable housing and nothing. The Inspector refused. The result is nothing.

Southwark is a borough where, per the Inspector’s own findings, ninety-three percent of households have incomes requiring social or intermediate housing. Its vacancy rate is below one percent — so acute that landlords have no structural incentive to maintain properties because demand allows them to re-let at higher rates without doing any work whatsoever. Its Housing Delivery Test score was eighty-two percent in December 2024 and, the appellant stated without challenge during proceedings, worsening. In 2024-25 it delivered below forty-five percent of its housing target. Against those facts, its council celebrated a decision producing zero homes as a great day.

Richard Livingstone and the question he did not answer

On the day the decision was published, Cllr Richard Livingstone — Chair of Southwark’s Planning Committee, and a figure whose social media commentary on London housing drew considerable frustration at UKREiiF the same week — posted on X:

“This was only 12% affordable housing. The average price for the market sale homes would have been £710k. In a borough where the average household income is £44k. Those homes would have done nothing to meet local needs.”

This argument is so common in planning discourse it has acquired the status of received wisdom. It deserves to be taken apart, because it is doing serious damage. Serious damage not just to housing supply, but for jobs, economic prosperity and the UK as a functioning society.

Livingstone is correct that a £710,000 average sale price is not accessible to a household earning £44,000. That is arithmetic, not analysis. The question it does not answer — and that nobody pressing this argument is ever required to answer — is what the alternative is. Not the theoretical alternative. The actual one, on this specific site, given the viability constraints his own council’s officers assessed. That alternative is not thirty-five percent affordable housing built by a willing developer at prices local people can afford. It is the Aylesham Centre as it stands: a building the Council’s own Conservation Area Appraisal listed under “negative elements,” describing it as having an “indifferent” character that does “little to enhance the conservation area.” The building that is now preserved, undeveloped, because the replacement was insufficiently deferential to the clocktower next door.

Livingstone chose the zero-homes outcome over the twelve-percent-affordable outcome and presented it as a victory for the forty-four-thousand-pound household. The forty-four-thousand-pound household has nothing. The Aylesham Centre remains. The planning committee chair is satisfied.

The get-out that guarantees nothing gets built

Paragraph 105 of the Inspector’s decision will be cited in planning refusals for the next decade. It should be read carefully.

“There is no reason for me to conclude a design better responding to those heritage assets could not be achieved.”

This is the planning system’s cleanest escape from accountability. It acknowledges that something should be built on this site. It declines to specify what. It asserts — without evidence, without a design brief, without a pre-application agreement, without any binding mechanism whatsoever — that a better scheme is achievable. And then it sends Berkeley back to the beginning.

The site has been allocated in the Southwark Plan for years. Berkeley ran an extensive pre-application process. The Conservation Area Appraisal from 2011 — fifteen years ago — identified the Aylesham Centre as a negative element and highlighted its redevelopment opportunity. The first discussions with the council about redeveloping the shopping centre began in 2017. Berkeley acquired the site in May 2021. The planning application was submitted in July 2024. The inquiry ran through October and November 2025. The decision came in May 2026. Nine years from first discussion to a refused appeal. And the answer is: try again.

Rob Perrins, executive chair of Berkeley, put it with appropriate directness. The Inspector, he said, “clearly values heritage impacts over housing delivery” and “this position would make development impossible in just about any town centre.” He added: “How can we be allowed to build next to world heritage assets like Tower Bridge, but not here? This is why developers, including Berkeley, can no longer invest in new London sites and the housing crisis continues to deepen.”

Berkeley has said it will not be acquiring more land in London. A FTSE 100 housebuilder — one of the most experienced operators in the capital’s market — has concluded that the regulatory environment makes new site acquisition unviable. That is not a negotiating position. It is a market signal. And the planning system that produced this decision is the reason it has been sent.

There is no mechanism in the planning system by which Berkeley can redesign and receive prior confirmation that a revised scheme will pass. The Inspector cannot give it. Historic England cannot bind itself in advance. The Rule 6 Party cannot be required to agree. The Council, which did not even determine the original application, has said it will “carefully consider next steps.” The site will sit. Another pre-application process will begin. Another application will be submitted. Another inquiry may follow. Another inspector may find the revised design still insufficiently sensitive to the conservation area.

This is not a planning system. It is a perpetual motion machine for generating professional fees and no homes.

The Parkhurst connection

This decision does not exist in isolation. PropViews has traced through two detailed pieces this year the mechanism by which the London planning system has progressively rendered brownfield residential development too complicated to come forward. The 2017 GLA SPG, the selective harvesting of the Parkhurst Road judgment, the embedding of EUV+ as the default benchmark land value, and the land market seizure that has reduced London to tracking at around five percent of its eighty-eight thousand homes-per-year target.

Yet this site came forward and the Peckham decision is that mechanism meeting heritage policy. Because despite the flattening of land values, the viability framework still can’t achieve anything more than zero affordable housing . The development plan says thirty-five percent is the minimum required. Those two statements cannot simultaneously be true, and the planning system has no mechanism for resolving the contradiction except to refuse the scheme and invite the developer to try again. Meanwhile the Inspector acknowledges in paragraph 107 “a critical need to provide new homes of all tenures for Londoners urgently and at scale,” gives it substantial weight, and refuses the scheme anyway.

The generational opportunity referenced in site allocation policy NSP74 — a phrase the Inspector himself deploys in his conclusions — has been deferred to a future generation that will inherit a more expensive site, a more entrenched heritage lobby, higher construction costs, and the same clocktower. Industry estimates suggest the cost of building a home has increased by almost fifty percent over the past five years, while average house prices have risen by twelve percent. The viability gap that made zero affordable housing the honest answer in 2026 will be wider, not narrower, when the next application is submitted.

The fiction of the housing allocation

There is a point that has not been made in any of the coverage of this decision — not in the Times, not in the Spectator, not in any LinkedIn thread — and it is the most damaging one of all in my humble opinion.

The Inspector has simultaneously found three things. First, that the site cannot viably deliver the affordable housing the development plan requires — Southwark’s own assessment put the maximum at zero. Second, that the density needed to make the numbers work causes unacceptable heritage harm to the conservation area. Third, that a better design could theoretically be achieved — without specifying what it looks like, how it pencils, or who will build it.

Those three findings do not produce a path to delivery. They produce a site that is allocated but permanently undeliverable.

This matters because the Aylesham Centre continues to sit in Southwark’s housing trajectory. It counts toward the council’s five-year land supply. It flatters the Housing Delivery Test numbers. It allows Southwark to claim a deliverable pipeline that the Inspector’s own decision has just demonstrated does not exist. The allocation says 850 homes. The viability evidence says zero affordable at any density the heritage framework will accept. The site contributes nothing to London’s housing supply except the appearance of supply on a spreadsheet.

If Berkeley — a FTSE 100 housebuilder with the resources, experience, and appetite to run a multi-year inquiry on a £70 million deficit scheme — cannot make this site work, no developer can. The EUV+ benchmark, is already supposed to be the floor that makes schemes viable and can deliver affordable housing. If the scheme still runs at a £70 million deficit at EUV+, the problem is not the land value assumption. It is that the density required to close that gap is precisely the density that the heritage framework will not permit. The two constraints are mutually exclusive. There is no scheme that satisfies both simultaneously.

The logical consequence — the one that planning policy has no mechanism to reach — is that the site should be struck from the Southwark Plan. Not deferred. Not redesigned. Removed. Its continued presence in the housing trajectory is not optimism. It is a misrepresentation of deliverable supply that allows the council to avoid the consequences of its own delivery failure.

Southwark’s Housing Delivery Test score is eighty-two percent. If sites like Aylesham are counted in the five-year supply on the basis that they are allocated and theoretically deliverable — when the Inspector has just found them undeliverable at acceptable density — that eighty-two percent is fictitious. The real delivery gap is worse. And the government’s response to an eighty-two percent score is nothing: no presumption in favour of sustainable development, no meaningful planning consequence, no mechanism that forces the council to confront the gap between its trajectory and its reality.

A council that cannot deliver its allocations, does not face consequences for failing to deliver them, is not a council managing a housing crisis. It is a council that has found a way to administer one indefinitely. The London planning system is now breaking down.

What a great day looks like

Southwark delivered below forty-five percent of its housing target in 2024-25. Its Housing Delivery Test score is eighty-two percent and falling. Its vacancy rate is below one percent. Its planning committee chair publicly opposed a scheme on the grounds that £710,000 homes do not meet the needs of £44,000 households — without being required to name the scheme that does, identify the site it will be built on, or explain who will build it at a viability ceiling of zero.

And when the Inspector agreed, it was called a great day.

The Labour party is in a terrible bind.  There are plenty of those in Southwark who will be aghast by this decision – many of them in leadership positions.  But there are also those like Cllr Livingstone who fervently believe in state planning and tenure management.  The two do not sit comfortably and the coalition is fracturing as it has done for the Conservatives.  Two big tent parties mean two parties unable to agree internally and inevitably it’s breaking up with the rise of alternatives.

Whilst our political system fails to find consensus let’s not forget this is also not a great day for the families on Southwark’s housing waiting list. It is not a great day for the developers who will look at this decision and reprice London brownfield risk upward again — Berkeley already has, announcing it will not acquire more land in the capital.

It is not a great day for the planning system’s claim to be a mechanism for delivering development rather than preventing it. It is not a great day for the Housing Minister who stood at UKREiiF the same week and insisted his government had done more for housing delivery than any in living memory — while Molior recorded 2,103 starts in London in the first quarter of 2026 against a quarterly requirement of 22,000.

It is a great day for the clocktower. It is a great day for the professional objectors whose services will be retained on the next application. It is a great day for a planning culture that has spent a generation learning to mistake obstruction for principle and call the result a victory for the community.

The community has no homes. The system is falling apart. We as a country move from managed decline to unmanaged decline.

The great day continues.