London Plan Slashes Housing Targets: Impact on Capital in 2026

Key Points

• Target Shortfall: The Draft London Plan, published on July 16, 2026, sets an ambition to build 558,000 homes between 2028 and 2037, significantly lower than the 850,000-home target set by the national government.
• Credibility vs. Ambition: City Hall officials, including Deputy Mayor for Planning Jules Pipe, argue that the 558,000 figure is a “credible” and “deliverable” target, whereas the government’s target is not currently achievable.
• Economic Realities: Mayor Sadiq Khan and his team cite high interest rates, rising construction costs, and the economic legacy of Brexit and the pandemic as primary factors necessitating a more “flexible” and “realistic” approach.
• Tiered Affordability: The plan introduces a tiered system for affordable housing thresholds, with some central boroughs returning to a 35% requirement from 2028, while others remain at 20% or 25% based on local viability.
• Green Belt and Infrastructure: The document proposes a limited, controlled release of Green Belt land for development, provided projects include high levels of affordable housing and improved transport links.
• Harsh Criticism: Reform UK Assembly Member Alex Wilson has condemned the plan as a “self-contradictory work of fiction,” accusing the Mayor of failing to address the housing crisis effectively.
• Consultation Period: A 13-week public consultation on the draft plan is now open, running until October 15, 2026.

London (Extra London News) July 17, 2026 – The Mayor of London, Sadiq Khan, has unveiled a new spatial development strategy that signals a major reduction in the capital’s housing ambitions for the coming decade, prompting immediate and sharp criticism from political opponents.

The Draft London Plan, published yesterday, outlines an aim to facilitate the construction of 558,000 homes between 2028—when the strategy is expected to be adopted—and 2037. This target represents a substantial departure from the 850,000-home goal previously established by central government ministers, sparking a debate over the balance between ambitious policy-making and economic viability.

Why is the new housing target significantly lower than government expectations?

Presenting the document at City Hall, Deputy Mayor for Planning Jules Pipe defended the revised figure, maintaining that housing remains the primary priority for the administration. According to MyLondon, Mr Pipe argued that the new 2037 target is far more “credible” than the government’s stated aim.

“This is not about lowering London’s ambition, but about bringing forward a new London Plan which is deliverable,” Mr Pipe stated, as reported by The Hackney Citizen. He emphasised that the plan is designed to restore developer confidence by aligning targets with realistic economic conditions.

Mr Pipe explained that hitting the government’s higher 850,000-home target would require three specific developments: a significant turnaround in the national economy, a notable increase in the Affordable Housing Grant, and massive investment in major transport infrastructure, such as the proposed Bakerloo Line extension.

What is the official stance from the Greater London Authority?

Supporting the Mayor’s position, Lucinda Turner, the Assistant Director of Planning and Regeneration at the Greater London Authority (GLA), indicated that the government’s 850,000 figure served only as a starting point for their analysis.

“Our approach has to be grounded in reality,” Ms Turner told the Local Democracy Reporting Service (LDRS). “At this point, 558,000 homes over 10 years is the maximum realistic number – and that in itself is ambitious. We want to meet need, but it will take time beyond this 10-year period.”

The plan acknowledges that previous delivery rates have rarely exceeded 30,000 homes per year, suggesting that the new targets require a shift in both strategy and infrastructure support to be realised.

How has the opposition responded to the Draft London Plan?

The announcement has faced intense political scrutiny. Alex Wilson, a Reform UK Assembly Member, did not mince words when discussing the strategy with the LDRS, labelling it a “self-contradictory work of fiction.”

Mr Wilson criticised the Mayor for increasing the housing target from the 2021 objective of 522,000 to the current 558,000, despite the capital managing only around 10,000 housing starts per year. “This Draft London Plan is a perfect representation of Sadiq Khan’s mayoralty – baseless and failing on the issues that matter,” Mr Wilson said. “I have faith that Londoners will see through it.”

What does the plan mean for affordable housing and developers?

The new plan seeks to address the “perfect storm” of high interest rates, labour shortages, and construction costs by implementing a more responsive, tiered system for affordable housing thresholds.

As reported by OnLondon and Building Design, the Mayor intends to restore the 35% affordable housing threshold for 12 central London boroughs—including Camden, Hackney, and Westminster—starting in 2028. A second tier of eight boroughs, including Haringey, Lewisham, and Newham, will be subject to a 25% threshold, while the remaining 13 outer London boroughs will maintain a 20% requirement.

Industry groups have offered a measured welcome to this flexibility. James Stevens, Director of Cities at the Home Builders Federation, noted that the housing affordability crisis is a significant challenge to London’s economic prospects. “It is encouraging that the Mayor is focusing on improving the viability of new housing,” Mr Stevens said, as quoted by Housing Today. He added that a move to reduce administrative complexity is a welcome step toward accelerating delivery.

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Is there a role for the Green Belt in the new strategy?

One of the more contentious elements of the Draft London Plan is the inclusion of a “limited and highly controlled” release of Green Belt land. According to Public Sector Executive, the plan suggests that development on such land could be justified if projects meet rigorous standards, including high proportions of affordable housing, strong connectivity to public transport, and net gains in biodiversity.

The draft identifies several potential locations across eight boroughs, including sites in Hillingdon, Barnet, and Enfield, where development could be considered. However, the move has already begun to generate debate, with analysts at Kanda Consulting noting that the political calculus around Green Belt release remains “complex,” particularly in areas with non-Labour controlled councils.

What is the next step for the London Plan?

The document, which is notably nearly half the length of its 2021 predecessor, aims to be a more streamlined blueprint for the next two decades. Mayor Sadiq Khan has framed the plan as a “blueprint for building a fairer, greener and more prosperous London.”

However, the administration is now entering a critical phase of public scrutiny. The public consultation, which began on July 16, will remain open until October 15, 2026. Following this period, the draft will be subject to an independent Examination in Public, with final adoption anticipated in early 2028.

As the city moves forward, the success of the Mayor’s plan will likely hinge on the delicate balance between his administration’s “realistic” economic targets and the broader, often much higher, expectations for meeting London’s acute housing demand. Whether the plan succeeds in unlocking development or remains, as critics argue, a move away from necessary ambition, remains a question for the coming years.