A planning inspector last week blocked an 867-home development at the Aylesham Centre in Peckham, ruling that the project’s benefits “do not outweigh the harm to the relevant designated heritage assets important to the area.”
The site, which began life as a Jones and Higgins department store in the 1860s, now sits largely empty, with shuttered retail units and minimal footfall beyond its Morrisons supermarket.
Even Poundland vacated the Aylesham Centre late last year, leaving behind a site that planning authorities still deemed too historically significant to redevelop during a national housing crisis.
The inspector accepted that Berkeley’s (LON: BKG) development would bring “social and economic benefits” to Peckham and help ease its “acute” housing shortage, yet still rejected the appeal.
Berkeley executive chair Rob Perrins responded sharply: “This is why developers, including Berkeley, can no longer invest in new London sites and the housing crisis continues to deepen.”
Local councillors appeared to welcome the decision, with some calling it a “great day” for Peckham, a reaction that drew criticism from housing advocates and industry figures.
The government expects 176,000 homes to be built in London over the next two years, but January data points to a 92 per cent shortfall on that target, with housebuilding slowing 84 per cent over the past decade.
David Fell, lead analyst at Hamptons, says housebuilders in London have been hit by a “perfect storm” of falling sales values and rising building costs driven partly by the ongoing Iran conflict.
London house prices have fallen consistently in recent months, with property experts pointing to poor interest rate conditions and stamp duty, which affects homeowners in the capital far more than elsewhere in the country.
Fell notes that higher-density residential schemes remain the most financially viable option for developers, yet these projects attract the most local opposition and face the longest planning battles.
Steve Turner, executive director of the Home Builders Federation, said: “London Plan policies combined with additional government taxes on new homes, onerous processes to get higher-rise schemes approved and challenging market conditions have effectively made London a no-go zone for housing investment.”
City Hall confirmed it could not intervene in the Aylesham Centre case because the appeal went directly to the planning inspector, whose decisions fall outside the Mayor’s authority.
Sadiq Khan’s office has said it will use upgraded planning powers more frequently to prevent local authorities from blocking development, with the Deputy Mayor stating Khan will “make no apologies for his mission to build the homes that Londoners need.”
Robert Colvile, head of the Centre for Policy Studies, said: “If we keep denying that basic economics applies to the housing market, including the principle that the only way to make homes affordable is to build many more of them, it will be no surprise that we don’t solve the housing crisis.”
FTSE 250-listed Taylor Wimpey (LON: TW) warned last month that cost pressures and shipping surcharges are hitting its supply chain, while Bellway (LON: BWY) flagged “heightened risks of supply chain disruption and rising cost inflation” in March.
Shanker Patel, chief executive of building materials firm Lords, said London has suffered from reduced overseas investment, adding: “We’ve done a great job in driving the foreign capital that was here away.”
Patel described new-build high-rise developments in London as “stuck in a really ominous position” but said buyers and developers are beginning to grow more comfortable with elevated interest rates.
“It’s going to be a while before we’re going to build, build, build in London, but we’re starting to see some green shoots. Anybody who walks the streets of London will see there’s a lot of stuff happening,” Patel said.