Affordable housing is set to see accelerated growth in London as the new plan focuses on it
The new London Plan lays out new planning policies to boost not only housebuilding, but the city’s businesses, job market, and economy.
Sadiq Khan, the mayor of London, is using the new plan to set out how the City Hall’s planning powers can be used to build as many affordable homes as possible while also delivering economic growth.
The draft London Plan is shorter than the previous plan
The draft plan is nearly half the length of the previous 2021 plan, reflecting attempts to streamline and reduce the burden on developers while not ignoring quality standards.
The priorities in the draft plan include:
- Supporting London’s future prosperity: The plan will create space for data centres and economic clusters for industries that will be vital to London’s future economy. This includes AI and life sciences. The plan will ensure there is sufficient land available to meet the needs of modern and efficient industries, such as data centres, logistics, freight and other strategic infrastructure, whilst freeing up industrial land in highly accessible locations for housing. This follows the mayor’s recent pledge to make London the global epicentre for green data centres and AI infrastructure.
- Driving growth across London’s economy: The plan will help to strengthen the Central Activities Zone as well as support Strategic Economic Clusters across London – hotspot economic areas where specialised industries can drive economic growth.
- Supporting world-leading destinations and the 24-hour economy: The transformation of Oxford Street will reinforce the West End’s position as a global destination for retail, culture, entertainment and tourism. The new London Plan will protect music venues, theatres and cultural spaces that underpin London’s £64bn creative economy and will promote London’s nightlife through strategic licensing. The plan recognises that pubs and cultural venues are a unique and intrinsic part of London’s fabric and will ensure they are protected.
- Revitalising high streets and town centres: The new London Plan will help local town centres adapt to changing consumer habits by supporting shops, cafés, pubs, restaurants and independent businesses, creating vibrant and resilient communities across London.
- Protecting the spaces businesses need to thrive: Affordable workspace, industrial land, logistics and strategic infrastructure will ensure businesses have the space they need to start up, grow and succeed in the capital.
- Delivering the homes Londoners need, maximising affordable housing: A new framework will help to deliver as many as 558,000 new homes by 2037. The draft plan shows this will be possible but only with the right national support, including investment in key transport infrastructure that will help to unlock large housing projects. Reflecting the difficult economic conditions for housebuilding in London, the draft London Plan also sets out a more flexible, responsive approach to affordable housing. This will ensure the highest possible number of new affordable homes are built in London in the years to come.
- Creating a greener capital: The draft London Plan will demonstrate leadership in improving and protecting the environment – promoting greener neighbourhoods, cleaner air, sustainable transport and increased biodiversity.
- Building more affordable homes while boosting access to green spaces: The draft plan prioritises brownfield development and will ensure housing delivery on brownfield sites is accelerated wherever possible. But this alone will not be enough to meet London’s housing needs. That’s why – as the Mayor set out in a keynote speech last year – the draft London Plan will allow some limited and selective release of Green Belt land. There will be strict requirements in place for this to happen, which include: maximising the level of affordable housing on the land; ensuring high-quality housing design and good transport connectivity; and increasing biodiversity and access to good-quality green spaces as part of developments.
- Building climate resilience into new development: As London experiences hotter weather, including more heat waves, the draft London Plan will encourage developers to use practical design features — such as shading, natural ventilation and building orientation — to help buildings stay cool naturally. The plan does not ban air conditioning, which can be incorporated into new developments alongside these design features. This may be especially important for hospitals, care homes and many schools to protect children, older people and vulnerable groups from extreme heat
Find out more about the draft plan here.
Housebuilding in the capital at risk
The publication of the draft plan comes shortly after emergency housebuilding measures were put in place for London in March, designed to remove blockers, bureaucracy, and viability constraints. This includes introducing a new fast-track planning route for London sites with 20% or higher in affordable housing, and a temporary relief from the Community Infrastructure Levy to reduce costs for developers.
London reached a crisis point late last year as the Home Builders Federation warned in a report that lack of buyer support, excessive red-tape, unrealistic demands for affordable housing, and unsustainable application delays all created a situation that required government intervention.
At the time, estimations found that if the government’s 1.5m new homes target was to be reached, 440,000 of them were to be in London. Despite this, housing completions and permission approvals continued to fall year-on-year, with just 30,000 homes being completed in London in the year to June 2025.
At the time, Neil Jefferson, chief executive of the Home Builders Federation, said: “The findings of Mind the Gap should be a major wake-up call for government and the Mayor of London.
“The capital needs an urgent overhaul of housing policy if it is to support the housing needs of Londoners. London Plan policies combined with additional government taxes on new homes, onerous processes to get higher-rise schemes approved and challenging market conditions have effectively made London a no-go zone for housing investment.
“Intervention is desperately needed to support first-time buyers, with Londoners facing the biggest barriers to home ownership in the country.
“If government is to stand a chance at making its aspirational 1.5 million homes target a reality, ministers must prioritise action to reverse the alarming decline in housing delivery across the capital.”
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