Savills has completed a series of client representations in response to the new draft London Plan, which was published by the Mayor of London in July.
The Draft London Plan included proposed detailed policies designed to shape London’s delivery of housing, jobs, social infrastructure and its environment over the next 20 years, with Savills sharing its initial thoughts on the Draft London Plan at the time. The consultation closed on 15 October 2026.
The client representations provided in-depth reviews by Savills Research of both the London development market and delivery levels, including (but not limited to) new build sales, viability challenges and build costs housing supply versus targets at a borough level.
A summary of our thoughts is shared below.
The Draft London Plan arrives at a challenging moment for housing delivery. Housing starts have fallen sharply and viability remains under pressure. At the same time, affordability remains a major challenge for Londoners. The Plan acknowledges many of these realities and introduces several welcome changes. However, the scale of London's housing need means further flexibility will be required if delivery is to increase significantly.
Reading the market
The Draft Plan reflects a growing recognition of the market conditions facing residential development.
A greater emphasis on Outer London and a modest release of Green Belt land signal a more deliverability focused approach. The proposals on affordable housing are also notably more flexible. The Plan also supports a broader range of housing tenures and typologies, including purpose-built student accommodation, shared living and specialist older persons' housing.
These changes reflect the challenges created by rising development costs, higher finance costs and a shrinking development pipeline. They also accept that future housing growth is likely to come from a wider range of locations and development models than in previous plan periods.
The delivery reality
Despite these positive changes, housing delivery remains substantially below both identified need and the Draft Plan target.
London currently requires around 85,000 homes per year, compared with the Draft Plan target of around 55,800 homes per year and recent delivery of closer to 33,000 homes annually. Private housing starts have fallen sharply and the number of homes under construction is at its lowest level for more than a decade.
At the same time, build costs have risen significantly faster than house prices, placing sustained pressure on development viability.
Unlocking more routes to housing delivery
- Make flexibility a long-term feature - the Draft London Plan acknowledges the weaker market conditions facing housing delivery and introduces greater flexibility in response. Given the scale of the housing shortfall and ongoing viability pressures, there is a strong case for embedding this flexibility throughout the Plan period rather than treating it as a short-term response.
- Widen the development pipeline - the greater emphasis on Outer London and Green Belt release is welcome. However, the scale of identified opportunities remains modest relative to London's housing need. Further consideration should be given to urban extensions, additional Green Belt release in sustainable locations and lower-density family housing where this aligns with local demand.
- Support a broader housing mix - purpose-built student accommodation (PBSA), shared living and specialist older persons' housing can help address specific housing needs while reducing pressure on mainstream housing stock. These sectors should continue to be supported where demand and viability are demonstrated.
- Plan for a longer recovery - the Draft Plan assumes market conditions will improve sufficiently to support delivery later in the Plan period. Given the sharp decline in housing starts and the long lead-in time for residential development, there is merit in making the flexibility provided through the Mayor's emergency measures a permanent feature of the Plan. Since 2015, London flat values have increased by just 10%, compared with a 60% increase in build costs, suggesting that development economics are likely to remain challenging even as market conditions improve.
- Greater flexibility on affordable housing – the Draft Plan’s changes to the threshold approach are welcome in principle, however more flexibility is considered important on tenure provision and, when proceeding with the viability route, there is concern that the requirement for early and long stage reviews will continue to hinder deliverability.
A step in the right direction
The Draft London Plan shows that policymakers are responding to the challenges facing housing delivery. Several of the proposed changes are likely to have a positive effect.
Yet the gap between housing need and likely delivery remains substantial. Closing it will require a planning framework that supports a wider range of development opportunities and enables more homes to be delivered across the capital.