Implications of the Homes for London Regulatory Package

Analysis for Landowners, Investors and Developers

London's development landscape is facing significant challenges. According to Molior research, just 3,248 private homes started construction in the first three quarters of 2025, a significant drop from previous years and around 5% of the government's target. This has contributed to a growing backlog and increased demand for temporary accommodation, with London boroughs reporting a 15% rise in households requiring emergency housing over the past year.

Proposed Regulatory Changes 

In response to these challenges, the Department for Housing Communities and Local Government and the mayor of London have announced the “Homes for London” policy bundle, designed to reignite the delivery of new homes via a combination of:  

• a temporary relief from the Community Infrastructure Levy (CIL) for schemes that commence after the relief is in place and before 31 December 2028 
• the removal of elements of design guidance that can constrain density including single aspect units, dwellings per core and bicycle storage 
• a time limited planning route enabling developers to secure planning permission with 20% affordable housing, of which half will be eligible for grant funding, as well as removal of late stage viability reviews providing eligibility criteria are met and the first floor of the scheme has been built by 31 March 2030 
• new powers for the Mayor to call in applications of schemes over 50 homes 
• funding to establish a City Hall Developer Investment Fund with an initial allocation of £322m. 

The package was formally announced by the Mayor of London on 23rd October 2025 and are subject to approval by the Greater London Authority and consultation, due to take place over 6 weeks from November 2025. This analysis examines the proposed  regulatory package, focusing on its significance for landowners, investors, and developers. 

In light of the broad and complex nature of the proposed changes, it remains essential that stakeholders get informed guidance on what these mean for London’s development market. Cushman & Wakefield’s experts across Living, Land and Development are on hand to offer expert advice, helping our clients navigate the new proposals.

Implications for Stakeholders 

Landowners:  

Lowering the affordable housing fast track threshold will aid overall development viability and profitability, and the primary intention of the proposals is to catalyse delivery of more housing in the capital. One outcome of improved scheme viability is the potential for an uplift in residual land value, potentially taking this over and above an asset’s existing use value.    

A reduction or waiver of CIL will further enhance the overall viability of schemes, particularly where CIL was previously a substantial deduction in appraisals. Enhanced land value relative to an asset’s existing use should help more sites come forward for housing delivery. 

Developers:  

• Reduced on-site affordable housing will improve scheme viability, enhancing metrics for lenders, and increasing the likelihood that construction will commence. 
• Relief from immediate CIL payments improves cash flow, facilitates access to construction finance, and can accelerate the transition from consent to site start, especially for marginal schemes. 
• Removal of guidance that constrains density may allow developers to increase efficiency, and therefore profitability, of their schemes, but it should be caveated that compliance with Building Safety Act will remain the fundamental hurdle.  
• The gain-share mechanism may add a degree of uncertainty for longer term delivery; given the length of time to achieve consent, regulatory approval and start on site which could take schemes beyond the 31 March 2030 deadline to reach fixed construction milestones. 

Investors:  

• Lower affordable housing levels may boost cash flow projections but could also alter the mix of housing products and tenures, impacting long-term yield assumptions and environmental, social, and governance (ESG) metrics.  
• The trade-off will be that total package prices from RP will be less, reflecting the lower provision, and there will be a greater reliance on private sales, where sales rates are slow (potentially a positive for rental schemes). 
• Removing late stage review removes an area of uncertainty for investors. Uncertainty kills investment and thus the key benefit of this area of reform will be in boosting the confidence of investors and developers to commit and bring forward delivery.  The understanding and application of the ‘gain share’ mechanism that will secure uplifted affordable numbers in the scheme , if it is not delivered to time limits, will be critical.

Potential Financial Impacts 

In order to illustrate the potential financial impact of the changes on scheme viability, we have applied the new affordable housing threshold and CIL relief to a hypothetical, 200-unit scheme in London.  

Based on our modelling, assuming all other assumptions remain static, we could expect to see a substantial improvement in overall viability on private sale scheme under the new package.  Fundamentally this has the potential to move the underlying development value above that of the asset’s existing use – a key hurdle for brownfield sites to become viable for redevelopment and/or change of use.  

It should be stressed that each scheme should be assessed on its own merits with every angle explored to maximise viability, in tandem with the new package of regulations. For example, some sites could be more valuable with a greater proportion of affordable housing at 100% social rent with grant funding applied as it de-risks sales and helps cash flow in light of slower market sales rates.

Risks, Uncertainties and Remaining Questions 

• The package is predominantly aimed at traditional private for sale tenure and, given this makes up the bulk of housing delivery, this is understandable. However, consideration should be given as to what these measures mean for the Build to Rent market. The package outlines that Build to Rent schemes which meet the criteria in London Plan H11 can provide affordable housing that is intermediate rent, with 30 per cent at or below London Living Rent levels and 70 per cent at a range of genuinely affordable rents. BTR may still benefit from CIL relief whilst PBSA and Co-Living have been specifically excluded.   
• In addition, the proposed time limitations and the requirement to commence development on site within a specified period introduce further complexity; schemes may be at risk if construction does not begin promptly, potentially jeopardising the ability to benefit from the new policy regime. 
• The potential for local authorities to retain discretion on certain instances of CIL relief means the impact could vary geographically, potentially creating winners and losers across different boroughs. 
• It remains unclear how the proposed changes will apply to existing Section 106 obligations and stalled permissions. Possible routes to vary obligations include Section 106BA and Section 73 applications, negotiated deeds of variation, or submitting entirely new applications—each of which carries different timing, risk, and appeal implications.  
• Furthermore, temporary policy relaxations are not guaranteed to override the statutory tests under Section 38(6), which means local authorities retain a degree of discretion, and legal challenges may arise. 
• No policy has been rumoured or formally announced for regions yet; could a similar approach play out to help regional centres deliver stalled or unviable developments? The lack of development and starts is less stark in the wider regions because of the greater differentiation in product that is possible and the increased focus on housebuilding as opposed to flats. However, there is still a similar issue with stalled or unviable higher density schemes in town and city centres and a similar package of measures could help to accelerate regional delivery. 
• Finally, it remains to be seen to what extent a 20% affordable housing requirement will unlock delivery; many developers are approaching viability negotiations on the basis of less than 20%, or even 0% affordable housing contribution through necessity already. Whilst this proposal has the potential to enhance the viability of many schemes it will not provide the answer to all, and developers still need to address concerns about slower sales rates, where there is now increased private housing in the scheme.

Conclusions 

Overall the package is well structured and early feedback from the development market has been broadly positive. Based on our hypothetical appraisal we would expect the package to substantially improve viability and enhance underlying development value. 

That being said, the actual benefit is uncertain where schemes are already seeking less than 20% affordable in a significant number of cases, and where the result is reliance on the sale of more private units, in a market where sales rates are already extremely low. Further measures may be needed to boost the impact of this policy and achieve the governments desired outcome of greater housing delivery.  

Nonetheless the time limit (the earlier of 31s March 2028, or the publication of the new London Plan) means that all parties should act now to assess the benefits that this change could have for their land and schemes:

Practical Next Steps for Landowners, Developers and Investors: 

Review Existing Assets / Schemes 

• Review underlying development viability relative to existing use value, particularly for challenged assets or those at risk of obsolescence that have previously been unviable  
• Update option pricing and conditional contracts to reflect the potential policy upside and seek mechanisms to share any future upside 

Prepare for CIL Relief 

• Schemes with at least 20% affordable housing may get 50% borough CIL relief (more for higher affordable levels) 
• Watch for the government consultation in November, review appraisals and prepare evidence of scheme viability 

Adapt to New Density Guidance 

• Explore greater flexibility on dual aspect, dwellings per core, and cycle storage. 
• Review designs to optimise density and viability, and engage with the GLA consultation. 
  

Use the New Time-Limited Planning Route 

• Schemes with 20% affordable housing on private land can proceed without a viability assessment. Half of affordable homes may be eligible for grant funding. 
• Identify eligible projects and apply before March 2028. 

Engage with the City Hall Developer Investment Fund 

• £322 million in grant funding will be available to unlock and accelerate housing delivery. 
• Monitor announcements and prepare to bid for funding. 

Participate in Consultations 

• Most changes will be subject to six-week consultations from November. Take part to help shape final policies. 

Cushman & Wakefield’s experts in Living, Land and Development are well placed to provide advice and support in navigating these next steps. Please reach out to the following to discuss your scheme: