Tuesday 19 May 2026 11:32 am

Berkeley said it can "no longer invest" in London (Jonathan Brady/PA Wire)

Southwark council has been blasted for celebrating the blocking of an 867-home development on the site of a Peckham shopping centre. The local authority hailed a “great day for Peckham” after housebuilder Berkeley failed to overturn a ruling against the development, which would have delivered retail, leisure and commercial space alongside the hundreds of homes.The planning inspector said he was “cognisant” of the need for new affordable homes in the capital and said the development would offer a “considerable benefit,” but blocked the plan on heritage grounds.Housebuilding campaigners and economists have rounded on the decision, warning that the emergency need for new housing in London is failing to be met. Berkeley has also slammed the decision, raising the alarm that it can “no longer invest” in London sites. Cllr Sarah King, the leader of Southwark Council, said following the failed appeal: “This is a great day for Peckham and we welcome the planning inspector’s decision to dismiss Berkeley Homes’s appeal for the Aylesham Centre.“[We] strongly argued at the public inquiry that the scheme was poorly designed and our position has been vindicated.”Robert Colvile, director of the Centre for Policy Studies (CPS) think tank, told City AM that it was “downright offensive” for the council to celebrate the planning refusal, given the “scale of London’s housing crisis”.Sam Dumitriu, head of policy at think tank Britain Remade, wrote on X: “Housebuilding has collapsed in London. And Southwark Council are celebrating having blocked 850+ homes.“You can’t afford to live in London because of thousands of decisions like this over decades.”Berkeley first submitted plans to redevelop the Aylesham Centre in 2024 but later cut the number of affordable homes in the proposals from 270 to 77.The initial proposal had met the 35 per cent affordable homes threshold set by the Mayor of London, but the later figure saw this fall to 12 per cent. Berkeley said this decision was forced by “demonstrable and evidenced facts about the London housing market”. ‘Clearly nonsense’ opposition to plansBut Southwark Council said the plans fell “well short” of its expectations, claiming it would be a “missed opportunity” for Berkely to be allowed to continue with the development.The authority said Berkeley should not have reformulated its plans on the basis of finances: “On occasion profits must to some extent be hoped for rather than banked at the grant of permission.”Colvile criticised the council’s position, saying: “In other words, you should build even if you have no idea you’re going to make money. Mental.”“If we keep denying that basic economics applies to the housing market – including the principle that the only way to make homes affordable is to build many more of them – it will be no surprise that we don’t solve the housing crisis,” he said.Joe Reeve, co-founder of the Looking for Growth campaign, told City AM that blocking the development was “obviously very frustrating” and described the council’s reasoning as “clearly nonsense”.“There’s a growing movement of young people who are getting fed up of vested interests making decisions that short-term hurt individuals, long-term hurt the country,” he said.Berkeley ‘can no longer invest’A spokesperson for the Centre for British Progress think tank told City AM: “You cannot solve London’s housing crisis while turning down dense housing on brownfield sites in Zone 2. “London already has fewer homes than comparable large cities, pushing up rents and pricing young people out of opportunity.”Labour’s pledge to build 1.5m homes by the next general election is facing significant pressure and housebuilding progress is especially slow in the capital, where the number of rental homes under construction has fallen in nine consecutive quarters.London is expected to build 88,000 new homes every year to meet the city’s needs but consultancy firm Molior has predicted that only 4,550 per year will be built in 2027 and 2028.FTSE 100-listed Berkeley saw its shares plummet last month when it announced its shock decision to halt landbuying over an “unprecedented increase in cost and regulation”.Rob Perrins, executive chair of the Berkeley Group, told City AM: “Housing delivery in London is at an all‑time low, the Government has set clear pro‑housing policy, yet we are still blocked from building homes on a fully allocated brownfield regeneration site.“This is why developers, including Berkeley, can no longer invest in new London sites and the housing crisis continues to deepen. Decisions that block housing delivery and growth must be challenged, and we will now consider all options open to us.”Southwark Council has been contacted for comment.