Canada Water tests London’s resi temperature

Lem Bingley, PW editor

Ministers might as well pledge that Sir Keir Starmer will develop a vote-winning charisma prior to the next election. Neither is remotely credible.

Most indicators have been pointing in the wrong direction for some time. In January, Starmer’s favourability rating, as tracked by YouGov, plunged to its lowest ebb since he took office, sinking to depths of negative sentiment explored previously only by Liz Truss. Starmer’s standing has since recovered a little, but the balance of opinion remains deeply unfavourable.

Similarly, in January think tank the Centre for Policy Studies (CPS) forecast that new housing deliveries in the capital – the economic engine expected to complete about a third of the 1.5 million – is instead on course to develop the lowest volume of new homes for 80 years.

Gauging future delivery by the current level of starts on site, CPS forecast that new homes in London would complete at an annual rate of just 4,550 in 2027 and 2028.

Ministers might as well pledge that Sir Keir Starmer will develop a vote-winning charisma

While interventions in the planning system have been welcome, and gateway 2 at the Building Safety Regulator has been wrenched open, the collapse in housing development is not wholly the fault of either. Building homes, especially in the capital, is simply not as viable as it was. It’s all about money, or the lack of it.

Last week, London mayor Sir Sadiq Khan and housing secretary Steve Reed confirmed ‘emergency’ interventions announced in October and now ready to be enacted following consultation. These include a fast track for London schemes that commit to at least 20% affordable housing, available until 31 March 2028; Community Infrastructure Levy relief for some schemes until 30 March 2030; eased London Plan requirements; expanded call-in powers for the mayor; and £324m for an investment fund to unlock stalled sites.

While some of these measures require still more finger drumming – parliamentary time for secondary legislation in the case of new planning powers – the new approach is already evident. On Friday, deputy mayor Jules Pipe gave the green light for revisions to the Canada Water masterplan being brought forward by British Land and AustralianSuper.

Submissions from the developers outlined that viability compression since approval of the initial scheme in 2020 meant they could now provide only 3% affordable housing, down from an initial Section 106 agreement aiming for 35%, based on assumptions of value growth over the lifetime of the project.

In Friday’s hearing, Pipe acknowledged that building cost inflation and higher borrowing costs had dramatically worsened viability projections, noting that “the prevailing economic circumstances are not those we would wish them to be”. He also noted that with only 3% affordable housing, the scheme would not qualify for the new emergency measures, but was, nonetheless, stalled.

Perhaps surprisingly, to get it going again, Pipe not only approved increases to the scheme’s height and massing, but also approved grant funding of around £50m (at £250k per affordable unit) to bring the overall scheme’s affordable housing provision up to 9%.

The new pragmatism – and the cash grant, of course – is worth a lot more than any amount of pledges or promises.