Berkeley Homes has launched a High Court judicial review after a local Labour council blocked its plans to redevelop a run-down shopping centre in south London.
The FTSE 100 housebuilder is challenging the May decision to refuse construction of 867 homes on the site of the Aylesham Centre in Peckham.
Berkeley said the council’s decision to block the Aylesham Centre redevelopment had directly undermined Labour’s wider housebuilding agenda at a critical moment.
The scheme faced fierce opposition from local campaign groups, including Aylesham Community Action, which argued the redevelopment would have amounted to “gentrification [on] steroids”.
The campaign attracted support from Miatta Fahnbulleh, the local Labour MP, who described the planning refusal as a “big win” for the area.
Ms Fahnbulleh is now one of the central figures shaping Andy Burnham’s economic agenda as he works to build a programme for power following his Makerfield by-election victory.
Rob Perrins, the executive chairman of Berkeley, said the decision to block the scheme would “undermine the Government’s pro-homebuilding agenda unless it is swiftly quashed”.
Perrins added: “This decision has already shaken investor confidence and it is a great shame that we now have to go through the courts to have it overturned.”
Morrisons, which is supporting Berkeley on its judicial review, warned that the refusal sacrificed not only a new town centre but also much-needed affordable homes for local families.
The planning inspector refused the project on heritage grounds, ruling that the proposed tower blocks would “not tie in successfully with surrounding historic buildings”.
Berkeley’s plan had envisaged replacing the 1980s shopping centre with more than a dozen tower blocks rising up to 20 storeys high, anchored by a new Morrisons supermarket.
Ms Fahnbulleh, responding after the initial refusal, said: “We need new homes and investment, but development must work for local people, protect Peckham’s character and deliver genuine long-term benefit, not just luxury flats.”
The judicial review is expected to place significant pressure on Ms Fahnbulleh as she takes on a senior advisory role within Burnham’s emerging government.
The Government is falling well short of its housebuilding targets both nationally and in London, despite Labour making construction a central policy pledge since taking power.
Labour committed to building 1.5 million new homes by 2029, requiring around 300,000 new builds per year across England.
According to data from Savills, just over 150,000 homes per year will be delivered between now and March 2028, down from 189,000 last year.
London’s situation is particularly acute, with Molior data showing that construction began on just 5,547 homes in the capital last year against a target of 88,000 annually.
The High Court case could serve as an early test of Burnham’s housing policies, which potentially include an annual land value tax to replace stamp duty and council tax.
During his tenure as Manchester mayor, Burnham’s office oversaw a housebuilding drive that produced hundreds of luxury flats in skyscrapers across the city.
However, a taxpayer-backed fund he presided over was found to have produced almost no affordable homes despite local targets, a record he has since defended publicly.