This one is about the current position with London (non) development and some thoughts about what procedural steps may be open to you if you are a London (non) developer with a planning permission for a scheme that is no longer viable to build out.
On 14 October 2025, Molior published figures for Q3 2025 construction starts and sales in relation to schemes in London with 25+ homes for private sale or rent. Apologies for the extensive quoting but their summary is clearer than anything I can write:
“Between 2015 and 2020, there were 60-65,000 homes for private sale or rent under construction in London at any given time.
Today, that number has fallen to 40,000 … and 5,300 of those are halted part-built.
With a surge of completions expected in 2026, Molior forecasts that just 15-20,000 new homes will be actively under construction on 1st January 2027.”
“London had just 5,933 new home sales in Q1-Q3 2025.
Sales rates are weak across all local markets and at every price point.
At prices up to £600 psf – the level at which most London owner-occupiers can buy – sales to individuals are virtually non-existent.”
“Build-to-rent completions are about to plunge.
Interest rates rose during 2022, then the Liz Truss budget pushed them higher.
This stopped new money from funding London multifamily development.
Completions are set to disappear after 2027 because construction starts fell in 2023 / 2024.”
“There were 3,248 private starts in Q1-Q3 2025.
London is now on track for fewer than 5,000 private construction starts in 2025.”
“Starts have been falling for a decade because sales rates and profitability have been falling for a decade.
Building Safety Regulator delays have made things worse in 2025.”
“Development is unviable across half of London.
Development costs are high, so it is unviable to build profitably in half of London – areas under £650 psf.
This is even if the land is provided free and there are no planning obligations like CIL and affordable housing.”
“London has 281,000 unbuilt permissions.
These numbers are private + affordable C3 permissions.
The numbers include outline consents, detailed consents and unbuilt phases of schemes partly under way.
Also included are projects successful at committee but still waiting S106 sign-off.”
Set all that alongside the homelessness and rough sleeping crises in London. The BBC reported yesterday that more than 132,000 households were living in temporary accommodation on 30 June 2025, up 7.6% from the same time last year. Aside from the human cost, this is of course at a huge financial cost for London boroughs: £740m ‘black hole’: London’s temporary accommodation crisis draining local resources (London Councils, 13 October 2025). And at the sharpest end: Number of people “living on the streets” of London increases by 26% (Crisis, 31 July 2025).
Whilst I try not to wear out my two typing-fingers commenting on press speculation about forthcoming announcements, I think we can assume that the government and the Mayor of London will soon be announcing various measures to try to turn this around or at least provide some sort of jump-start (note to government press team, I suggest that we are in “jump-start” rather than “turbo-charge” territory). See for example the Guardian’s 17 October 2025 piece London developers to be allowed to reduce percentage of affordable homes.
The spectre in the press pieces of some temporary reduction in developers’ threshold for qualifying for the Mayor’s fast-track (i.e. basically avoiding the need for formal viability appraisal and a late stage viability review mechanism if they can commit to a level of affordable housing which is usually 35%, with a policy-compliant split of affordable housing tenure types within that – see policy H5 of the London Plan for more detail) down to perhaps 20% is being seen by some as amounting to an actual reduction in the amount of affordable (and particularly socially rented) housing that will be developed. But this analysis is unfortunately wrong: very few schemes are currently proceeding with 35% or more affordable housing. Viability appraisals either agreed or accepted after scrutiny on appeal (this is not developers cooking the books) are already coming out at way less than 20%, let alone 35% (which is why simply reducing the threshold alone wouldn’t be enough). See for instance the inspector’s decision in relation to the Stag Brewery appeal (summarised in my 4 May 2025 blog post (7.5% affordable housing) and the 29 May 2025 decision letter in relation to a proposed tower block in Cuba Street (16.6% affordable housing). Nor is this a purely London phenomenon, if you recall last month’s Brighton Gasworks decision (summarised in my 27 September 2025 blog post) (zero affordable housing).
20%, plus the other measures being whispered about such as increasing subsidies for socially rented housing and/or allowing councils not to charge CIL, may tip the balance so as to turn some non-developers back into being developers again and thereby deliver more affordable housing (including socially rented housing) in absolute numbers (which is what counts after all) than is currently the case.
But what about the many schemes consented on the basis of 35% or more, that simply aren’t proceeding, at least beyond basic operations to keep the permission alive (see my 7 September 2025 blog post The Stressful & Sadly Often Necessary Task Of Keeping Planning Permissions Alive)?
If we look to amend existing, unviable, section 106 agreements, no longer do we have the benefit of section 106BA, a provision introduced in April 2013 via the Growth and Infrastructure Act 2013, to allow developers to apply to modify or discharge affordable housing obligations in Section 106 agreements where those obligations made a development economically unviable, and then repealed three years later in April 2016. That provision unlocked various stalled permissions at the time. Is it too late, or too unpalatable, for an amendment to the Planning and Infrastructure Bill simply to reintroduce it?
Instead, the main routes are:
- If the section 106 planning obligation is at least five years’ old, a formal application to the local planning authority can be made under section 106 A of the Town and Country Planning Act 1990 on the basis that the relevant obligation, unless modified, “no longer serves a useful purpose”. The test is expressed very generally which is unhelpful but the case would be that if the obligation is causing development, otherwise beneficial, not to proceed, it cannot be serving a “useful purpose”. There is the right of appeal to the Planning Inspectorate.
- Seeking variation of section 106 planning obligations in the slip-stream of an application made under section 73 of the Town and Country Planning Act 1990 (an application, of course, for planning permission for the development of land without complying with conditions subject to which a previous planning permission was granted – and which is to be assessed against the current development plan and other material considerations). This was the route taken in the Cuba Street appeal I mentioned above. Full planning permission had been granted in December 2022. A section 73 application was made to amend the approved floor plans set out in the schedule referenced in condition 2 of that permission, to “provide an increase in the residential units from 421 to 434, and a reduction in the affordable housing (AH) provision from 100 (71/29 affordable rented to intermediate split as a ratio) to 58 (66/44 affordable rented to intermediate split as a ratio). In percentage terms the change in AH would be from 30.15 % to 16.6%. A consequence of these changes would be amendments to conditions 24 and 29, with respect to wheelchair accessible homes and cycle storage, given that they relate to the quantum of development subject to the original permission.”
- Negotiating a deed of variation to the section 106 planning obligation, outside these formal procedures, without any recourse to appeal if the authority is resistant.
- A fresh application for planning permission – utterly the nuclear option in times of cost, time and risk.
If there is indeed some form of announcement from MHCLG and the Mayor of London, I will be interested to see:
- What is said about existing stalled permissions and any advice that is to be given to boroughs as to the approach they should take when approached by way of any of these procedural routes.
- More generally, how will any announced (presumably temporary) relaxations with regard to the London Plan policy H5 threshold approach or any other policy requirements sit as regards section 38 (6) of the Planning and Compulsory Purchase Act 2004 (“If regard is to be had to the development plan for the purpose of any determination to be made under the planning Acts the determination must be made in accordance with the plan unless material considerations indicate otherwise”)? Where there’s a will there’s a way but this is all another reminder, as if we needed it, that the process for reviewing and updating the London is so slow as not to be fit for purpose.
Oh and we still await MHCLG’s updated planning practice guidance on viability.
“London calling, at the top of the dial.
And after all this, won’t you give me a smile?”
Simon Ricketts, 18 October 2025
Personal views, et cetera
SIMONICITY 