London Housing: What Happened This Week as Starmer's Planning Reforms Hit the Capital

The Greater London Authority gave the green light on Thursday to a 1,400-home scheme on the former Thamesmead Waterfront site in southeast London, one of the largest single residential approvals Mayor Sadiq Khan has signed off since Labour's Planning and Infrastructure Bill cleared its Commons committee stage in late June. The decision lands at a politically charged moment — Starmer's government is demanding that every London borough submit revised Local Plans by March 2027, and council chambers from Bromley to Enfield are already lawyering up over mandatory housing targets.

The pressure is real and it is accumulating fast. Westminster's housing target under the revised National Planning Policy Framework sits at 4,004 new homes per year — a figure the council has publicly described as undeliverable without significant upward revision to permitted building heights along the A5 Edgware Road corridor. At the same time, Southwark Council this week deferred a contentious mixed-use proposal on the Old Kent Road that would have delivered 340 affordable units, citing concerns over infrastructure contributions falling short of Section 106 obligations. Campaigners from the 35% Campaign, which monitors affordable housing delivery across the capital, say this kind of deferral is becoming routine.

Costs, Targets and the Bermondsey Problem

The numbers underpinning these arguments are stark. Average asking prices for a two-bedroom flat in Bermondsey now stand at £575,000 according to Rightmove's June 2026 index, up roughly 6 percent on the same month last year. Social rented homes account for just 17 percent of all new approvals across the 32 boroughs in the first quarter of 2026, according to data published by the London Development Database. Charities including Shelter have repeatedly pointed out that the capital needs at least 88,000 new homes annually to make meaningful inroads into a waiting list that currently holds 175,000 households.

Labour's Planning and Infrastructure Bill is supposed to solve the slow-drip problem of consent by creating a new Infrastructure Levy to replace the existing Community Infrastructure Levy and Section 106 system. Developers operating on schemes along the Bakerloo Line Extension corridor — running through Lewisham and into New Cross — say they have been holding back final investment decisions pending clarity on exactly how that levy will be calculated. The government's technical consultation closed on June 20; revised guidance is promised before the summer recess.

What Boroughs and Buyers Should Watch Next

The next flashpoint is almost certainly Barking Riverside, where developer Countryside Partnerships is pushing for consent on a further 2,200 homes as part of the wider 10,800-unit masterplan. Barking and Dagenham Council is expected to consider the application at its planning committee on July 15. Transport for London has conditionally linked the full build-out to the extension of the Overground to Barking Riverside station, a line that began limited passenger services in 2022 but still lacks the capacity upgrades needed to serve a fully occupied neighbourhood.

For buyers and renters trying to navigate all of this, the practical reality is that completion timelines on new-build schemes across east London keep slipping. Several Bellway and Taylor Wimpey sites in Stratford and Canning Town are running three to six months behind original handover dates, partly because of materials costs that remain elevated following the post-pandemic supply chain disruption. The Help to Buy scheme closed in March 2023 and its replacement, the First Homes programme, has delivered fewer than 2,000 units nationally since launch — leaving first-time buyers in zones 2 and 3 with very limited purchase options below £450,000.

The government insists the Planning and Infrastructure Bill, combined with a promised increase in planning officer headcount funded by raised application fees from April 2026, will clear the backlog. Borough planners are considerably less confident. The test will come in the next six months as revised Local Plans land on the Planning Inspectorate's desk and the argument about who really controls London's skyline is fought, street by street.