Berkeley Group planning setback deepens London housing investment concerns

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Berkeley Group planning setback

Highlights

Planning Inspectorate rejects Berkeley Group's proposal for 867 homes in Peckham, citing scale, affordable housing, and high-rise design concerns.
Berkeley cut affordable housing in the project from 35% to 12% of floor space after Southwark Council determined the scheme was unviable with social housing.
Housebuilders warn London planning constraints, highlighted by the Aylesham ruling, threaten investment as Labour targets 1.5 million new homes nationally.

Peckham project rejection highlights planning conflict

As reported by Financial Times, the Planning Inspectorate rules against Berkeley Group's proposal to redevelop the Aylesham shopping centre site in Peckham with 867 homes and a new shopping area. The decision follows years of disputes between the developer and Southwark Council over the scale of the scheme and the level of affordable housing it could support.

Southwark Council had originally been preparing to reject the project because of the limited affordable housing provision, even though its own technical assessment concluded the development was not viable with any social housing at all. Campaigners had also criticized Berkeley for cutting the affordable housing offer from 35% of floor space in its original plan to 12%, arguing that the scheme would fail to meet local needs.

The Planning Inspectorate says the proposal would still have been refused even with 35% affordable housing because of the effect of the high-rise design on Peckham's character. The inspector says the towers would be overly domineering in a low-rise area and would not fit successfully with surrounding historic buildings, a view Berkeley executive chair Rob Perrins criticizes as a barrier to needed urban development.

Housing supply pressures intensify across London

Nationally, Prime Minister Keir Starmer's Labour government says boosting housebuilding remains a priority as it tries to meet a target of 1.5 million new homes over the parliament. The Aylesham ruling adds to developer concerns that planning constraints in London are undermining that goal and contributing to a broader collapse in homebuilding in the capital.

Berkeley says the decision shows why housebuilders can no longer invest in London, underscoring wider industry frustration over planning risk and scheme viability. Campaigners opposing the project, however, say homes priced beyond the reach of most residents do little to address demand in a borough where 93% of people are on incomes that require social or affordable housing.

The outcome leaves Peckham at the center of a wider policy debate over how London balances heritage protections, affordable housing requirements and the urgent need for more homes. It also illustrates how major urban regeneration projects can stall when local political pressure, viability limits and design objections converge.

In our earlier coverage of the Senate’s bipartisan housing bill, we noted that Senate Banking, Housing, and Urban Affairs Committee leaders advanced legislation aimed at easing unaffordable housing costs and improving access to homeownership. We also highlighted that negotiations were continuing with the White House and lawmakers as part of a longer process to finalize a package that can pass both chambers and reach the president.

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