Unlocking Residential Schemes in London

Get London Building Again

Last Autumn the Government and London Mayor announced that they would bring in a range of measures to unlock development that is being held back due to lack of financial viability, in large part as a result of raises in the cost of building over the last couple of years.

Further detail of the measures was released yesterday, 25 March 2026, and they comprise five parts:

• Reduction in affordable housing requirements in development
• Temporary, partial CIL relief
• Amendments to design guidance that can constrain development density
• Mayoral planning powers, and
• The establishment of a City Hall Developer Investment Fund.

The measures relating to CIL and Mayoral planning powers will be subject to secondary legislation, which is aimed to come into force in May.

Reduction in affordable housing requirements in development

This will be applicable for all eligible planning applications registered before 31 March 2028 (a longer time period than previously indicated) but can also apply to existing consents that can be demonstrated as not being viable. The measures are inevitably somewhat complex, but the headline change is a reduction in the percentage of affordable housing required to qualify for the existing London Plan fast track route, to 20%, in relevant developments. A mix of affordable housing is still required, and the reduction does not apply to grey belt proposals.

Temporary, partial CIL relief

As with all CIL related matters, the measures are also complex and the secondary legislation will confirm the detail, but essentially it will allow relief on residential floorspace (excluding student and co-living) where at least 20% affordable housing is provided, and the borough-level CIL liability is over £500,000. There are a range of other requirements, such as a commencement deadline of 31 March 2030 and a requirement to demonstrate that the development is currently unviable.

Amendments to design guidance that can constrain development density

London Plan Guidance intended to support housebuilding has been published, which provides further detail in relation to the approach to be taken in terms of affordable housing already outlined. However, it also – effectively – relaxes planning guidance on matters which are deemed to have constrained development density, albeit the commitment to good design is retained.

• Design requirements – the objective of no more than 8 units per core is removed, as well as the requirement to maximise dual aspect flats.
• New cycle parking standards – introducing three tiers of borough, with the least accessible boroughs requiring lower levels of cycle parking than the most. Flexibility is also introduced in how cycle parking is delivered, including on-street and communal provision.

Mayoral planning powers

Detail will be provided in forthcoming secondary legislation, but the intention is that the Mayor will have the power to review and call-in applications for more than 50 homes where the borough is minded to refuse, and to call in development with more than 1,000sqm of floorspace in the Green Belt or Metropolitan Open Land.

The establishment of a City Hall Developer Investment Fund

The initial objective of this fund will be to deploy a fund of £324m to support interventions on stalled sites, with priority given to projects where homes can be completed by Summer 2029. It is advised that funding guidance will be published, and expressions of interest opened, in the coming week or so.

Commentary

Although the full picture is still to emerge, most housebuilders will welcome the motivations of the government to help unlock the current challenges in housebuilding in the Capital. However, as ever, it remains to be seen how much of an impact it will have, or whether it will go far enough.