From Planning Purgatory to Pragmatism: Strong Support for London’s Affordable Housing Policy — But S106 Reliance and Underlying Economics Issues are here to stay
The Greater London Authority’s emergency measures published this week include some significant welcomed changes from the draft consultation issued in November 2025. The stripping away of layers of conditionality which, while well-intentioned, previously left developers and funders with no clear realistic route that would have materially aided the delivering of residential development in the capital.
In their place, as published this week, is a clearer, more pragmatic set of guidance that provides much-needed certainty at a time of renewed geopolitical and economic instability.
That clarity of direction matters. In a market increasingly defined by fragility, policy that is readable, predictable and — crucially — usable, is half the battle. The GLA deserves credit here: this is a far more delivery-conscious position.
However, the LPG is guidance. Discussions with local planning authorities this year on the draft LPG have revealed a spectrum of likely approaches — from full compliance to elected Members continued, almost slavish, adherence to existing headline policy targets, which remain largely unachievable on most sites.
The revised approach to timing (validation of planning by March 2028 rather than implementable planning consent) and the removal of late-stage reviews is the key meaningful improvement that should materially improve the prospects of delivery. That said, no one should be under any illusions — even with the lower policy bar, this is not a silver bullet albeit the amendments should be applauded. A significant number of sites will remain stubbornly undeliverable in current market conditions and those for the foreseeable future.
And those economics are, at present, doing few favours. The recent increase in UK gilt yields has decisively shifted the ground again. Expectations that property yields might begin to soften are already being unwound, with upward pressure on yields feeding directly into downward pressure on values.
The Monetary Policy Committee’s identification of renewed inflationary pressures last week has further dampened sentiment. The market is no longer meaningfully pricing in base rate reductions this year — a reversal that removes one of the few potential tailwinds for residential affordability. Without rate relief, and the accompanying negative impact on what was already very low growth expectations for UK plc, the outlook for residential sales rates and values remains constrained, absorption assumptions look increasingly optimistic, and development appraisals — already stretched — come under further strain.
Against this backdrop, the emerging London Plan faces some unavoidably difficult choices. Maintaining the existing 35–50% affordable housing targets in their current form risks becoming an exercise in policy theatre if it comes at the expense of actual delivery. The LPG reasserts the mayor’s continuing commitment to higher threshold levels in the medium to long term. A recalibration towards a 20% baseline (and perhaps lower on the larger more complex strategic sites) will need to be more actively considered as a more credible medium- to long-term position — one that prioritises homes built over targets proclaimed. The current problems are in many ways embedded, even before the recent current avoidable conflict in the Gulf.
Crucially, as has been the case for many years, in London, there is an over-reliance on Section 106 as the primary delivery mechanism for affordable housing. This reliance is increasingly misaligned with market reality. A broader, more diversified approach — incorporating grant, institutional capital and alternative delivery structures — will be essential if London is to increase supply in a meaningful manner.
In this context, the adoption of the London Plan Guidance, alongside a commitment to provide certainty on Community Infrastructure Levy relief later this year (rather than a measure that in the draft consultation was discretionary), is both pragmatic and timely.
If there is one complaint, it would be that there is no reference to Co-Living or PBSA, both of which have contributed significantly to on-site affordable and financial obligations in recent years and the economics / valuations of such uses, will be hampered going forward by negative pressures on yields at a time when the yield curve was until very recently in favour of likely improved valuations.
Sites with existing consents must seek to demonstrate that the availability of grant funding and CIL relief does not unlock delivery, prior to submitting a S73 to amend the affordable housing. The changes to the timing and required milestones mean that this will now benefit more sites than would have been the case previously.
The challenge now is collective. Policymakers, developers, funders, and boroughs must act swiftly and explore a range of alternative delivery routes. While the newly adopted LPG is undeniably clearer, less conditional, and likely to improve affordable housing delivery, the market is not waiting, and headwinds are set to persist. The scale of the challenge cannot be met by planning gain alone.
Pascal Levine is a founding partner of DS2 and a Chartered Surveyor with 25 years’ experience in a London planning and development capacity. I
