Changes incoming to London’s planning system – solving London’s housing crisis?

1. Boosting viability of new developments through CIL relief

Recognising the acute challenges facing residential development in London – and in order to make new development more viable – there will be some degree of temporary relief from the Community Infrastructure Levy (CIL). Developers will get up to 50% relief on borough-level CIL charges if they commit to delivering at least 20% affordable housing. This aims to make stalled or unviable projects financially feasible. Additional relief is also available for schemes delivering more than 20% affordable housing.

The relief would apply to residential floorspace (excluding student and co-living accommodation) in schemes, or phases of schemes, that commence after the relief is in place and before 31 December 2028.

2. Relaxing density constraints

Recognising the knock-on effects that limiting the density of developments has on viability, changes to London Plan guidance are proposed that will allow: 

• More flexibility on dual aspect requirements
• Higher dwellings per core
• Reduced cycle storage requirements

These changes are intended to increase housing density and reduce construction costs.

3. Reduced affordable housing requirements in a new time-limited planning route

In order to encourage schemes to come forward and existing schemes to progress in the near term, a new, time-limited planning route is proposed, which will sit alongside the existing Fast Track and Viability Tested routes. This will allow developers to bypass viability assessments if they commit to delivering 20% affordable housing, with tenure being policy compliant.

Schemes that commit to providing affordable housing at or above the 20% level will be eligible for grant funding for the first 10%. It should be noted that the Fast Track affordable housing percentage is also dropping for both public and industrial land, which has the potential to unlock a lot of public sector land and secondary/tertiary industrial sites. 

A gain-share mechanism – which is a (late stage) viability review – will kick in if the development has not been materially progressed by a given date. While this ‘mechanism’ is not new, the performance metrics by which the viability review will be run are different. This gain-share mechanism will ensure that if market conditions improve, additional profits are shared with the community to increase affordable housing.

4. Expanded planning powers for the Mayor

The fourth component expands the Mayor’s ability to intervene directly in relation to applications of potential strategic importance.

The Mayor can now call in applications for schemes over 50 homes if boroughs intend to refuse them. The Mayor can also call in developments of a building of 1,000 sqm or more on green belt and Metropolitan Open Land, streamlining approvals for strategic housing projects.

Mayoral Development Orders will also allow the Mayor to grant planning permission directly for strategic schemes.

5. Maximising affordable housing on existing consents

Where there are existing consents in place, the GLA is encouraging delivery of affordable housing in excess of 20% and they will make grant funding available.  With consented schemes at 35% or more affordable housing which are currently stalled due to viability reasons, the GLA is encouraging assessment where the additional grant funding is available to increase the level of affordable.  

For schemes less than 35% affordable where grant funding is higher than the benchmarks, the GLA will require Additionality Viability Assessments to be carried out. 

The GLA is suggesting any amendments to the S106 affordable housing levels or tenures should be renegotiated by a Deed of Variation.

6. £322 million City Hall Developer Investment Fund

An initial allocation of £322 million of grant funding from 2026-27 to establish a new City Hall Developer Investment Fund has also been confirmed. This fund will help unlock and accelerate housing delivery, especially on challenging or stalled sites. It builds on the success of previous initiatives like the Mayor’s Land Fund.

The above measures sit alongside the action taken by the government to speed up decision-making by the Building Safety Regulator relating to high-rise buildings in London, with the Building Safety Regulator committed to clearing historic new build applications in England by the end of the year.

Timescales

Most of the measures outlined will be consulted on for six weeks starting from 1 November 2025. Changes will be implemented via secondary legislation or Emergency London Plan Guidance (LPG). The new planning route and CIL relief are expected to be available until 31 March 2028.

Impacts of measures proposed

The package of measures outlined above is intended to unlock stalled developments, speed up planning approvals and ultimately make housebuilding more financially viable in London.

In the context of the acute viability challenges facing residential development in London and the implications this has for housing delivery, the measures outlined are considered positive and crucially look to meaningfully address the factors limiting housing delivery in the immediate term. The extent of the impact these changes will have is dependent on how quickly they can be brought into effect and is reliant on the positive application of these measures by local authorities. 

For those involved in London residential developments, making representations to the forthcoming consultation is advised and Savills is well placed to assist with these.

Further information

Contact Matt Richards or Scott Hudson