Cracks in London market as fewer planning applications result in new homes

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Cracks are appearing in London’s housing pipeline, with no new homes built on almost half the sites that were approved for planning permission three years ago.

This new analysis, by London First and Grant Thornton, shows that planning permission was granted for 54,941 new homes in the capital in 2014. But three years later only 29,701 homes have been built, or are currently under construction.

This “attrition rate” of 46 per cent is a significant increase on the 33 per cent seen in 2016.

The Mayor’s new housing target states that London has to build 66,000 new homes each year to meet the demand for housing and address years of under investment.

Sadiq Khan’s “London Plan” has proposed that a significant proportion of these new homes should be in the capital’s 13 outer boroughs.

However, this research shows that just 26,548 homes were completed in 2017, and only 3,000 of these home were built in London’s suburbs despite making up more than half of London’s land.

Their research does indicate an appetite to build though, with a record number of planning applications made in 2017.

In total 80,000 applications were made, a 14 per cent increase on the year before, and more than twice the number of applications lodged in 2010.

Despite this, the number of the planning applications that were approved has continued to fall, from the 54,941 registered in 2014, to just 48,024 in 2017.

There was some good news for cash-strapped buyers though: around a third (30 per cent) of planning applications approved were for affordable housing. This is almost twice the number of new affordable homes that were granted planning permission in 2010.

Looking at the number of completions, 7,510 were deemed ‘affordable’ in 2017. This is up for the 2,379 that were built in 2010, but still “far short of what the capital needs” according to the authors of this report.

London First’s chief executive Jasmine Whitbread says: “Every year tens of thousands of new homes fall by the wayside, and the ongoing slide in planning permissions will only make things worse.

“London’s housing pipeline appears to be cracked, and unless we get to grips with the house building hold ups, generations of Londoners will be priced out of a place to call home.

“With outer London building just 3,000 homes in 2017, the Mayor must get serious about holding these boroughs to account.”

Grant Thornton’s director of government and infrastructure, Ian Tasker adds: “Permission rates for applications in London have fallen for the fourth consecutive year, while the increase in completions has been marginal.

With the Mayor’s target now set at 66,000 new homes we simply do not have enough permission in the pipelines to reach this number.

“Without dramatic change and more direct intervention this target is not going to be achieved. We need to address this now by making better use of land and increasing housing density.” As he points out even London’s boroughs with the highest housing density lag those in cities like Paris and Madrid.

More news and analysis on London house prices.

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