Mayor calls-in rejected Berkeley housing developments

London Mayor, Sadiq Khan, has used his planning powers to ‘call-in’ planning applications for the Borough Triangle and Bermondsey Place developments, after both were recently rejected by Southwark Council for having too little affordable housing. They are both Berkeley Group schemes and the Mayor will now make his own decision on whether to approve or refuse the applications, after separate hearings for each. Berkeley, Southwark Council and objectors will all be invited to attend, once the hearing dates are set.

When Southwark Council’s planning committee unanimously rejected Berkeley’s proposals for the development of Bermondsey Place Phases 2 and 3 at the beginning of October, it was the third large Berkeley scheme to fail to gain planning approval, following the Borough Triangle, at the beginning of September and the Aylesham Centre, in July 2025.

Berkeley appealed against the Aylesham Centre decision¹, but lost; an application to the High Court for a judicial review of the Inspector’s decision has also failed.

The three decisions

All three applications entailed big reductions in affordable housing, either by way of a s73 variation of an existing planning permission (reducing affordable housing from 35% to 10% on the Borough Triangle), or by securing a whole new planning permission (a reduction to 12% from 40% on Bermondsey Place) or by amending the planning application before it had been determined (also a reduction to 12% from 35% for the Aylesham Centre). Had all three revisions succeeded it would have reduced the number of affordable homes from 951 to 304, across the three schemes, based on available figures, a loss of around 650 affordable homes, including around 400 social rented homes².

Affordable housing in the balance

Affordable housing was a major bone of contention on all three schemes. The Planning Inspector, as decision-maker for the Aylesham, deemed the 12% level of affordable housing satisfactory, but ruled that this did not outweigh the design harms. On the other hand, Southwark Council, as the decision maker for the Borough Triangle and Bermondsey Place, did not consider the affordable housing satisfactory in either development.

The Borough Triangle application was refused for three reasons- that the low level of affordable housing failed to provide enough public benefit to outweigh the harm caused to Trinity Church Square Conservation Area, that it failed to meet Southwark’s significant need for social rented and intermediate housing and that it also failed to provide enough benefit to outweigh the harm to the amenity of nearby residents, in particular daylight and sunlight impacts.

The Bermondsey Place application was refused because of the low level of affordable housing failing to meet the significant need for social rent and intermediate homes in the borough

In rejecting the three applications, the planning committee went with the recommendation of their planning officers for the Aylesham Centre and Borough Triangle, but against the recommendation (to approve) in the case of Bermondsey Place Phase 2 and 3. Also unlike the other two schemes, the construction of Bermondsey Place has already begun³, with 285 homes on Phase 1 nearly complete. This first phase will include 86 affordable homes, with all three phases delivering 167 affordable homes, out of 1,345 homes in total. In percentage terms, Phase 1 will have 40% affordable housing, while Phases 2 and 3, will have 12%, making for 18% affordable housing across the whole site⁴.

Disagreement about viability deficits

Inevitably the viability of the respective schemes was a critical issue for the three applications. Berkeley’s arguments for all the sites were broadly the same - that economic circumstances, including rising build and finance costs, slow sales and new regulatory requirements had rendered their schemes unviable and unable to support the 35% affordable housing required by the Southwark Plan. Their no-nonsense conclusion was that all three schemes were so unviable that they could not deliver any affordable housing (a conclusion that both Southwark’s own viability advisors and the GLA agreed with). Nonetheless, Berkeley took a ‘commercial decision’ on affordable housing in each case - to deliver 10% on the Borough Triangle and 12% affordable housing on the Aylesham Centre and 12% on Bermondsey Place.

The conclusions that the schemes were unviable were challenged by objectors and councillors on several counts. While the consensus between Berkeley’s advisors (DS2), Southwark’s advisors (BPS and Quintic) and the GLA (for the Mayor) was that all the schemes were unviable, there was disagreement about the size of the deficits, particularly for those of the Borough Triangle and Bermondsey Place.

On the Aylesham Centre DS2 found a deficit of £67.35m, while BPS calculated a smaller £41.4m (there is no published figure from the GLA). On Borough Triangle DS2’s deficit was £290.7m, BPS’s £79.5m, while the GLA said £131.2m. On Bermondsey Place DPS said the deficit was £116.84m, Quintic £34.9m, the GLA £3.8m. As can be seen from these figures the estimates of the deficit varied by nearly £26m for the Aylesham Centre and by as much as £211m for Borough Triangle and by as much as £113m for Bermondsey Place⁵.

Profit and the emergency measures

Objectors and councillors also questioned the higher profit targets for market housing used by DS2 - 20% Gross Development Value (GDV)) against the 17.5 % GDV measure used by the GLA. This raises the overall viability threshold (and increases it further as the proportion of market housing increases) as well as lifting the bar for any surplus profit to fund additional affordable housing, in the event of viability reviews. The detrimental impact on viability of reducing affordable housing, thus increasing market housing, which takes longer to sell off, was also pointed out. In addition, more market housing makes for a longer development programme, increasing finance costs. Berkeley’s 8% finance rate was also queried, in the cases of the Borough Triangle and Bermondsey Place.

Both objectors and councillors also noted that Berkeley had not taken advantage of the government and Mayor’s emergency measures for any of the developments. The aim of these measures is to improve viability on ‘stalled’ schemes, by a combination of grant from the Mayor and a proposed relief on the Community Infrastructure Levy (CIL), on condition that developers commit to providing 20% affordable housing (down from 35% affordable housing). Berkeley gave a verbal undertaking at the Bermondsey Place meeting to try to improve the affordable housing through viability reviews, but this formed no part of the formal offer⁶.

Affordable housing can improve viability

Objectors to Bermondsey Place further noted that Berkeley had not tested higher levels of affordable housing than the 12% offered, such as 20% (the emergency measures level), or 35% (the minimum policy requirement). While these levels would have reduced the gross value of the scheme, the grant and CIL relief that more affordable housing could attract might compensate for much of this. Southwark Law Centre argued that additional savings from marketing/sales fees, a reduction in finance costs and a lower 17.5% profit rate could leave a scheme with 35% affordable housing in a better viability position than the 12% scheme proposed.

This approach would be in line with the Mayor’s current thinking, as laid out in the draft London Plan 2026, which says ‘affordable housing’s ability to provide cash flow in a development means that providing higher levels of affordable housing forms a vital part of the strategy to increase overall housing delivery. This reduces a site’s exposure to market absorption sales rates, which ultimately limit the number of market homes that can be sold and therefore the overall rate that a site can be built out’⁷.

The viability test that Berkeley did conduct, on 12% affordable housing (without any of the benefits of grant etc) only served to prove that this was itself unviable ⁸, which meant that their offer to nonetheless build a scheme with 12% affordable housing had no underpinning. Had the committee approved the application on this basis, they would have done so relying solely on Berkeley’s word that the scheme was deliverable and without positive evidence that it would include any affordable housing.

Some⁹ might hold that Berkeley was going ‘above and beyond’ the viability limits of the scheme and their offer should be accepted on the basis that any affordable housing is better than none, which is all there would be if the application was refused. But a more sceptical view would be that the mere fact that Berkeley is offering 12% shows that they think it is achievable, despite being ‘unviable’, and that viability assessments are not the final word when it comes to setting affordable housing levels.

Secondly, though Quintic and the GLA agree with DS2 that the scheme is unviable, the difference in deficits arrived at by the three bodies’ different assessments (very large differences for Borough Triangle and Bermondsey Place) can only undermine confidence in the whole exercise. This also demonstrates that the conclusions of viability assessments should be treated with caution.

Lost opportunities

Had Berkeley’s applications been approved Southwark would not only have forsaken nearly 650 affordable homes, but also incurred a significant lost opportunity cost, by allowing three large sites to deliver below the minimum 35% affordable housing requirement.

The affordable housing requirement has been set to help meet the needs of the 93% of households of households in the borough who are eligible for affordable housing¹⁰ and 22,000 households who are on the housing waiting list. But development sites are limited and if they are given over almost entirely to market housing then obviously those needs will go unmet. And while it is undeniable that some affordable housing would be provided if Bermondsey Place Phase 2 and 3 were built, 12% would be a meagre amount, 81 units, compared to the nearly thousand-plus market units¹¹. Many more households than the fortunate 81 will see the prospect of an affordable home recede, not just because the great majority of homes would be free-market, but also because the limited amount of land available for housing in the borough will be reduced, without Bermondsey Place providing its fair share of affordable housing. The remaining sites, and there are few of Bermondsey Place’s size, would have to provide proportionately more affordable homes to make up the loss.

These lost opportunity costs of approving housing developments are described in the draft new London Plan 2026, which says ‘Not only do sites delivering low levels of affordable housing mean that the gap between need and supply continues to grow, it poses significant opportunity costs which will continue to impact in the medium to long term given land scarcity in London’¹².

What we say….the greater need must come first

While harm to heritage was the reason for the rejection of the Aylesham Centre scheme, in the eyes of Southwark’s planning committee all three of Berkeley’s schemes foundered on the lack of affordable housing¹³ and for the simple reason that the schemes do not meet Southwark’s housing need.

Berkeley would have it that any affordable housing should be welcomed, if need is so great. There is reason, though, to doubt viability justifications for low affordable housing and the ‘something is better than nothing’ position ignores the lost opportunity cost of giving over large sites almost entirely to market housing, which few households in Southwark can fully afford.

Berkeley and others also see these decisions as examples of a broken planning system¹⁴ - but in a borough where a large majority of households would qualify for affordable housing, decisions rejecting schemes that do not provide enough affordable housing are an example of a planning committee that is doing its job, not a symptom of dysfunction.

Berkeley, like other developers, list several causes of their current viability problems, but never much more than one solution - cut affordable housing. And they want deeper cuts than the Mayor’s 35% to 20% reduction, for a ‘fast-track’ planning approval. This reduction was a mistake in the first place, and if developers are allowed to go even further, Southwark will see very little new affordable housing over the next decade and beyond.

Finally, while viability assessments were a key issue for all three applications, it is for Southwark’s planning committee, as the decision-maker, to weigh them up, in the planning balance¹⁵, taking account of other factors including need.

Southwark’s decisions to reject the Berkeley’s applications were the right ones and now the Aylesham Centre application has been settled in Southwark’s favour they must prepare to defend their Borough Triangle and Bermondsey Place decisions before the Mayor just as robustly.

Footnotes

1. Berkeley made their appeal to the Secretary of State for Homes, Community and Local Government, on the grounds of non-determination, before the application was decided by Southwark Council. The planning committee refused the application because of the low level of affordable housing, uncertainty about the delivery of the Community Land Trust and failure to re-provide retail space and because the remaining benefits of the scheme did not outweigh the harm caused to local heritage by the size of the development. ↩

2. Bermondsey Place was originally known as the Malt St development. Malt St incorporated the Nye’s Wharf development and they share an s106 agreement. No unit figures are given for the affordable housing in the outline element of the s106, only percentages. Two planning documents submitted by Berkeley are used for affordable housing calculations instead - a 17/AP/2773 Applicant letter 10 April 2019, and the updated 25/AP/2987 Planning Statement, April 2026 (plus the Nye’s Wharf figures). The social rented units lost from Aylesham Centre (135) and Borough Triangle (111) are calculated from figures in their respective planning committee reports. Overall, the figures for lost affordable housing are a reasonable reflection of the magnitude of loss entailed by Berkeley’s proposals. ↩

3. Borough Triangle has been ‘implemented’ under the existing consent, but no housing has yet been built. ↩

4. Because the Phase 2 and 3 planning application is entirely new and distinct from Phase 1 only the 12% affordable housing amount these phases offered was considered by the committee - see Committee Report Bermondsey Place Phase 2 and 3, 25/AP/2987, 6 Oct 2026, para 112. ↩

5. Tables of viability findings from the Planning Committee A, 6 Oct 2026, Supplemental Agenda para 14 for the Bermondsey Place and Planning Committee B, 9 Sept 2026, Supplemental Agenda No 2 para 7 Borough Triangle. ↩

6. Aylesham Centre Planning Committee report 24/AP/2074 para 112, 15 July 2025 ↩

7. Draft London Plan 2026 HN3 Rationale 3.55. ↩

8. Bermondsey Place Phase 2 and 3, 25/AP/2987, Quintic Advisory Addendum, 24 August 2026 Table 2 ↩

9. For a selection of a range of opinions see our blogpost on the Aylesham decision. ↩

10. Southwark Plan 2022 Policy P1 Social rented and Intermediate housing. The figure dates from 2018, but it is unlikely that the affordability of housing in the borough has improved since then. ↩

11. See Committee Report Bermondsey Place Phase 2 and 3, 25/AP/2987, 6 Oct 2026, para 8 for number of Phase 1 units and para 10 tables for number of affordable units and total number of units. ↩

12. Draft London Plan 2026 HN3 Rationale 3.55. ↩

13. The planning committee for the Aylesham Centre application resolved that ‘The proposed development, owing to the low level of affordable housing and the uncertainty regarding the delivery of Community Land Trust homes would fail to deliver sufficient public benefits to outweigh the heritage harm to the character and appearance of the Rye Lane Peckham Conservation Area….’ Minutes Planning Committee B, Application 24/AP/2074 15 July 2025. ↩

14. One commentator roundly criticises the planning committee and describes objectors as ‘vested interests’ and ‘ideologues’, who have ‘captured’ the planning system. They also suggest that the 35% Campaign would be satisfied if Bermondsey Place were never built, regardless of affordable housing. This is not the case - our aim is to help secure the highest levels of affordable housing; we think this blogpost lays out our position clearly enough. ↩

15. As noted by the Aylesham Inquiry Report para 76, although in this case the Inspector used his power to conclude that 12% affordable housing was sufficient. ↩