The number of major residential schemes being submitted by developers in London is continuing to drop.
Just 265 projects for 10-plus homes were granted consent in the capital last year, the lowest level since Office for National Statistics records began in 2000, Knight Frank analysis of new official data shows.
This is a fall of more than 60% since 2000 and a 15% drop compared with 2022 (see chart 1, below).
The dismal picture is down to a decline in applications coming forward rather than rejections, with the percentage granted planning permission remaining stable at 80%.
The data confirms that the decline in London is even sharper than for England as a whole, and comes as housing secretary Michael Gove seeks to intervene in London housing delivery ahead of the mayoral election on 2 May – when Labour mayor Sadiq Khan hopes to win a historic third term.
Gove and prime minister Rishi Sunak appear to be pushing an agenda for cities to deliver the bulk of the UK’s housing need. The government-commissioned review of the London Plan, led by Christopher Katkowski KC, was published last month and blamed “the multiplicity of policies in the London Plan” for frustrating rather than facilitating the delivery of new homes.
Khan has dismissed the review as a ”desperate political stunt”. Certainly, the ONS data shows that England as a whole is far from immune from the decline in major applications.
Knight Frank’s analysis shows that the number of applications granted permission across England fell to the lowest level seen since 2009 – marking a 14-year low. Overall, 3,836 projects were granted consent in 2023, a 13% annual fall, which is only just higher than the 3,590 granted back in 2009.
A closer look at delivery across London’s boroughs shows a mixed picture across the capital.
Knight Frank associate Anna Ward said: “Several boroughs are lagging behind on housing delivery four years into the London Plan’s 10-year target time frame, while others are comfortably on track.”
More than a third have so far delivered under 30% of their 10-year targets, Knight Frank’s analysis shows (see chart 2).
Redbridge, Lewisham, Kingston and Richmond are the weakest performers, having delivered less than 20% each between April 2019 and March 2023.
The strongest boroughs on delivery include Westminster (52%), Brent (48%) and Tower Hamlets (45%).
In total, London boroughs, including the City of London, have collectively delivered 158,600 homes over the four years up to March 2023 – which is just under 40,000 homes per year and 24% below the London Plan’s 52,300 capacity-based annual target.
Nationally, most local planning authorities which failed the Housing Delivery Test 2022, published in December last year, are located in London, the South East or the East of England. This comes with significant consequences for those planning authorities.
Overall, nearly 40% of London boroughs now face a presumption in favour of development, a policy which approves any development unless its adverse impacts “significantly and demonstrably” outweigh its benefits.
Ward said a range of factors were playing into the current situation. “The slowdown is driven by a decline in applications coming forward amid multiple headwinds for development – from high finance costs to a weaker sales market and additional requirements on energy efficiency and fire safety,” she said. “The percentage of applications actually granted planning permission is still broadly stable at around 80%.”
She added: “Limited capacity on the electricity grid is also delaying new homes across the UK by several years, with several council leaders this week pointing to a growing queue of developers waiting to be connected.”
However, Ward said there are signs that the picture could be turning more positive. Knight Frank’s latest Land Index survey shows that a stronger proportion of housebuilders think new starts will increase this year.
The firm is predicting moderate house price growth – 3% in the UK as a whole and 2% in London this year and next – while build costs have levelled off, inflation is coming under control and mortgage rates have come down.
Photo © Anthony Harvey/Shutterstock (11726522l)
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