How the circularity problem was real, how City Hall over corrected, and the Age of Enforcement
Part One: What We Established in Parts 1 and 2
PropViews has spent two pieces tracing the mechanism by which the London planning system severed housing land supply.
For new readers, the short version:
Part 1 traced how Existing Use Value plus a premium — EUV+ — became the default benchmark land value methodology in London’s planning system. The Parkhurst Road judgment of 2019 (presided over by Mr Justice Holgate) was reviewed in light of London policy to show it had been selectively harvested and there had been an over correction.
Part 2 looked at the history of the methodological warfare that took place across the Capital before Parkhurst and what happened after.
Part 3: explains the problem of circularity and how the over correction ushered in the age of enforcement which would decapitalise London development and contribute to an unprecedented collapse in housing land supply.
The Circularity Was Real
Before the enforcement era — before the 2017 SPG, before Parkhurst, before EUV+ hardened into dogma — the viability system had a genuine structural flaw. It is worth understanding precisely what that flaw was, because the GLA’s overcorrection was a response to a real problem, not an invented one.
The flaw was this. The residual land value methodology requires an estimate of market value for the site. In practice, that meant comparables — actual transactions of broadly similar sites. The circularity problem arises because those comparable transactions were themselves conducted in a market where developers were acquiring sites on the assumption they could negotiate affordable housing contributions down below the published policy requirement. Sites were trading at prices calibrated to the expectation that they would not achieve policy compliance.
Those transactions then became the comparables that justified the land price in the next appraisal. The higher the land price, the lower the affordable housing that could be delivered. The lower the affordable housing delivered, the more transactions closed at policy-non-compliant prices. Those transactions became the comparables. And so on.
Two appeal decisions illustrate how this operated in practice.
In the case of 271-281 King Street, London (APP/H5390/A/13/2209347), the Inspector placed significant weight on Red Book valuations based on market comparables as providing objective legitimacy to market value. The Inspector treated comparable evidence as if it conveyed an authority that comparable evidence, by definition, cannot provide when the comparables are themselves non-policy-compliant.
In the case of 22 Tower Street, Camden (APP/X5210/S/15/3133785), the Inspector relied on comparable land transactions to assess whether the £19 million paid for the site represented an overbid. Finding that similar prices had been paid for other sites, he concluded there was no overbid. The problem the Inspector did not address is that those comparable transactions may themselves have incorporated a discount for anticipated Section 106 negotiation. The comparables validated the price.
This was the pre-Parkhurst world. The circularity was real. It needs to be acknowledged. But what was not acknowledged was that the policy framework made compliance extremely challenging for development economics to achieve.
When the circularity issue was extinguished comprehensively by the London 2017 Viability SPG instead of resolving the issue, what happened was a new loop was created. The loss of market intelligence meant that planning policy began to operate in a bubble where its own assumptions validated themselves with an implicit presumption that by increasingly depressing land values, more and more could be taken for the public good.
And so London entered under Sadiq Khan into a rigorous land value capture regime without any means of actually being able to supervise whether it would work. This meant the ratchet went further and further before anyone was able to stop to evaluate what was working and whether, with materially worsening macro economic conditions, there might need to be a reassessment.
By the time the pause came, capital was in flight and the sector was on its knees. How did this happen? It happened because after 2017, London was to enter what became known to many in the sector as the age of enforcement.
Part Three: Overcorrection — The GLA SPG and the Age of Enforcement
Instead of fixing the input problem — the comparables — the GLA fixed the output. If market comparables were producing non-policy-compliant land values, the solution, in the GLA’s hands, was to remove market comparables from the methodology entirely and replace them with a theoretically derived benchmark that had no necessary connection to what the market would actually bear.
On a site where the existing use was declining, obsolescent, or marginal, EUV could be very low. Public land value evaporated in this post Parkhurst world with the expectation that it needed to deliver 50% affordable.
It also created a real issue for sites which were open land but not necessarily offering any amenity value. Here sites would essentially represent nil value in the SPG’s eyes, yet many could offer good housing opportunities. However, no private owner will sell at nil. Open storage became the rage and London began to loose more and more housing supply land.
With the pandemic, resultant cost inflation and poorly conceived regulatory interventions, development became increasingly unviable. However, policy thresholds did not change. Indeed, and in part due to the prohibition on market intelligence being considered through comparables, they hardened.
Viability became the battle ground to defend planning policy which led to increasingly desperate attempts to manipulate viability outcomes to benefit unachievable aims. Particularly when it became evident that depressing land values alone would not be enough for unachievable policies to work. Policy was operating in a vacuum. The response could have been pragmatic, instead it ushered in enforcement. The next section looks at two cases in point.
The Stag Brewery, Mortlake (APP/H5390/W/24/3339060)
The Stag Brewery in Richmond is a prime example where City Hall simply could not accept reality. Reality that London’s planning policies could not achieve the threshold levels it believed the EUV+ approach had baked into the system.
After nearly a decade of process and three planning applications, Singapore based City Development’s appeal for 1,075 homes at the former Stag Brewery in Mortlake was allowed by Inspector Glen Rollings in May 2025. The affordable housing provision: 7.5 percent. Sixty-five homes out of 1,075. On a £1.3 billion riverside scheme.
The previous scheme — refused by the Mayor on height grounds — would have delivered thirty percent affordable housing. The reduced-height scheme forced by that refusal and programme elongation delivers 7.5 percent. It is, if nothing else, a demonstration of how the march of time has eroded the development viability of schemes on brownfield sites in London. And that march of time continues at pace.
The Mayor’s intervention inadvertently cost the community 22.5 percentage points of affordable housing. That is the enforcement era’s most eloquent self-indictment: a Mayor who refused a scheme delivering thirty percent affordable housing and replaced it with one delivering 7.5 percent, then participated in the appeal inquiry opposing it only to be comprehensively proven wrong.
But before it got to the outcome, the GLA fought hard over every line in the excel sheet. The GLA’s sales values were derived from asking prices rather than achieved prices and applied an eight percent uplift despite their own evidence showing a 2.6 percent decrease in residential flat values between 2022 and 2024.
The GLA preferred a fifteen percent profit margin; the Inspector accepted 17.5 percent, noting the high risk profile of a complex phased waterfront scheme with heritage constraints over a twenty-year programme. The Inspector also found that where comprehensive review mechanisms were in place, growth should not be applied at application stage to establish the initial quantum of affordable housing.
Anthony Lee, who acted for the appellant, described the appeal as one that could have been avoided had GLA viability officers engaged objectively with the numbers. The Inspector agreed with the appellant on every disputed input. The process consumed nearly a decade and many millions of pounds. The result: 7.5 percent. The GLA’s enforcement apparatus produced less affordable housing than the market, left to itself with a reasonable framework, would have delivered. Policy had disconnected from reality and was floating in the clouds.
Aberfeldy Village, Poplar (GLA/5512/02)
If the Stag Brewery shows the enforcement era operating on a private developer, Aberfeldy shows it operating on a housing association in joint venture with Mayalsian backed Eco World regenerating an existing social housing estate. The outcome is, if anything, more revealing because the promoter had no where to go.
Aberfeldy West proposed demolishing 330 existing social housing dwellings and replacing them with 1,582 new homes — a net uplift of over 1,200 units on an estate where ninety-three percent of residents voted in favour of regeneration on a ninety-one percent turnout. Tower Hamlets planning committee refused it eight to zero against officer recommendation. The Mayor called it in and approved it in January 2024.
So far, so positive. The Mayor rescued a scheme that a politically captured planning committee had refused. But the S106 agreement through which the Mayor exercised that approval is a forensic illustration of the enforcement era’s pathology.
The benchmark land value applied to the scheme was just £2.76 million — for a nine-hectare estate in Poplar, in an area where the surrounding development has been transforming values for a decade. The fixed developer return was forced down to eleven percent of GDV on a £600 million, twenty-year programme.
This sent a shock wave into the capital markets. The Inspector at Stag Brewery accepted 17.5 percent for a less complex scheme. The GLA applied eleven percent to a multi-phased estate regeneration involving live decanting, complex construction sequencing, heritage considerations, and two decades of capital exposure.
It got worse. There are two mid-stage reviews and a late stage review — three separate points at which any additional value growth the scheme generates can be extracted by the GLA before it can be reinvested in later phases. For Poplar HARCA — a housing association whose business model depends on recycling surpluses from completed phases to fund subsequent ones — this is a structural trap. The review mechanism consumes much of the capital that would otherwise fund Phase 3 before Phase 3 can begin. Was anyone at City Hall actually thinking about how investment works? The vacuum was becoming larger and larger and wrong thinking had become pervasive.
Clause 10.12 of the S106 requires the developer to pay £5,000 index-linked every time the GLA wishes to conduct a viability assessment. On a twenty-year programme with three review points, that is a minimum of £15,000 in GLA fees — rising with inflation — payable by a developer building social rent homes in one of London’s most deprived communities. City Hall monetised its own oversight function.
But whilst City Hall got to fund its oversight. The promoter was not so lucky. Annex 1 of the S106 excludes staff costs and project management costs from the late stage review cost schedule. The consequence is that every pound of staff cost and project management excluded from the denominator becomes profit in the GLA’s calculation — triggering a clawback that has no relationship to the actual economics of the scheme.
On a £600 million development with a twenty-year programme, staff and project management costs are not marginal items. They are millions of pounds in themselves. Their exclusion from the review mechanism is not a technical oversight. It is a revenue extraction clause. Again, it appeared that City Hall assumed developers could live off fumes for the next decade or so. The disconnect widened with every clause.
The GLA approved Aberfeldy and Jules Pipe, the Deputy Mayor deserves credit for taking political leadership on. But it then wasted all the political capital by imposing conditions that make the scheme’s long-term financial sustainability fragile to void. One insider suggested to me that there was no oversight of what was actually being negotiated. This is the enforcement era applied to social housing delivery. The Mayor saved the scheme with one hand and squeezed it with the other but perhaps without actually knowing it!
What These Cases Tell Us
The circularity problem was real. The comparables-based methodology of the pre-Parkhurst era was producing non-policy-compliant land values and falling affordable housing delivery. Something needed to change.
What changed was not the input methodology — it was the institutional culture. The GLA built an enforcement apparatus: in-house viability units, progressive BLV suppression, growth assumptions applied upfront, aggressive review mechanisms, S106 clauses designed to maximise extraction.
As the market conditions worsened, cross subsidy collapsed. With headline planning policies becoming impossible, rather than engage with the problem early, viability was enforced through increasingly uncommercial approaches and the feedback loop was severed.
What’s absolutely clear to me is that the more complex the framework, the less ability there is for politicians to actually pull levers. The system becomes captured and ransomed. City Hall had created a monster its senior leadership did not know how to control and to this day does not really understand. The result: a progressive decapitialisation of the market and a whole tonne of unviable paper consents burying London underneath.
The Parkhurst series will return.
Thank you to the many people who contribute to propviews.
