Part 2 of 3: The Greater London Authority cannot treat viability as someone else’s problem

The Mayor’s explanation for London’s housing shortfall leaves an important gap. While City Hall is right to identify national and international pressures on development, it has been much less willing to examine whether its own policies have contributed to London’s viability problems.

The cost of borrowing, construction inflation and weak market demand are not within the Mayor’s control. Affordable-housing requirements, planning obligations, carbon policies, design requirements and viability-review mechanisms are.

No single one of these requirements explains London’s housing slowdown. Taken together, however, they have a significant effect on whether a scheme can secure land, attract investment and proceed to construction.

Much has been written about the use of Benchmark Land Value and Existing Use Value Plus (usually shortened to BLV and EUV+) in development viability assessments.

Of course, the principle is not unique to London. National planning guidance also says that benchmark land value should normally be based on the existing use of the land, plus a premium sufficient to provide the landowner with a reasonable incentive to sell. The conundrum concerns how that principle is applied.

City Hall has used the methodology assertively, in conjunction with affordable housing thresholds and early and late-stage viability reviews. The intention is to suppress speculative land values and ensure that more of the value created by planning permission is captured for affordable housing and other public benefits.

In theory, this is attractive. If landowners accept lower prices, more value becomes available to fund affordable homes and infrastructure.

In practice, landowners are not passive participants in the system. Where the premium above existing use value does not adequately compensate them for taxation, relocation, risk or the loss of future development options, they may decide not to sell.

That does not mean every stalled site can be blamed on EUV+. It does mean that a planning system cannot simply assume that landowners will transact at the value policymakers consider socially desirable.

City Hall regards early and late-stage reviews as a legitimate way of capturing additional affordable housing where a development performs better than originally anticipated. Critics argue that they reduce potential upside while leaving investors exposed when costs rise or values fall. As capital can move elsewhere, marginal schemes may not proceed.

Investors and developers do not have to build in London. Investment can move to other regions, sectors or countries. If the potential return is not sufficient to compensate for risk, schemes will not proceed, however strongly politicians believe they should.

The risk is that investors increasingly look elsewhere as development activity and confidence in London weaken.

Devolution weakens the “Whitehall won’t let us” defence

Until now, City Hall has been able to argue that many of the decisive levers remain with central government. Burnham’s devolution programme is designed to weaken that defence.

Greater mayoral control over housing investment, transport, local energy, skills and innovation should allow these policies to be assembled around a single regional growth strategy. A greater interest in locally generated tax revenues should also give mayors a more direct financial stake in getting development and economic growth under way.

National bodies such as Homes England will increasingly be expected to work alongside mayoral authorities and respond to agreed regional priorities. Public bodies will find it harder to pursue their own programmes without considering the wider growth strategy for the place in which they operate.

Devolution does not, however, create money by itself. Assigning a share of an existing tax base is not the same as producing the additional affordable-housing grant or billions of pounds of transport investment needed to unlock every site. City Hall will therefore undoubtedly continue to challenge the adequacy of the settlement. The argument will increasingly concern the scale and allocation of funding, rather than whether London has sufficient power to set its own priorities.

Affordable-housing ambition has not translated into delivery

The Mayor’s record on affordable housing illustrates the wider problem. The £4 billion Affordable Homes Programme for 2021–26 recorded 14,335 starts by March 2026. This was below a target that had already been reduced from an original 35,000 homes to between 17,800 and 19,000.

That figure does not include every affordable home delivered in London, and it would be wrong to attribute the shortfall entirely to City Hall’s viability policies. Higher borrowing costs, construction inflation, contractor failures and the financial capacity of housing associations have all contributed. Nevertheless, it demonstrates the scale of the gap between political ambition and actual delivery.

The draft London Plan recognises that viability is a serious problem. It proposes a shorter and more streamlined policy framework and replaces the existing uniform affordable-housing threshold with a more differentiated approach.

In weaker markets, some schemes could use a Fast Track Route at 20% or 25% affordable housing, rather than the existing 35% threshold. Green Belt and public sector land would face higher requirements. These changes amount to an acknowledgement that the existing approach has not worked equally well across the capital.

The Plan stops short of a fundamental reconsideration of City Hall’s model. Viability is treated principally as a reason to adjust thresholds, demand more government subsidy and seek additional infrastructure investment, not as evidence that the cumulative burden of London-specific policies may need to be reduced.

City Hall’s position remains that the market and the economy have failed to support its policies, rather than recognising that some of its own policies have contributed to the market’s retreat.

Manchester offers Burnham a different story

This is where Burnham’s mayoral experience matters.

Manchester cannot be compared directly with London. It is smaller, has different land values, a different built form and a different housing market. London also faces infrastructure, affordability and land constraints on a scale that Manchester does not.

Even so, Manchester provides Burnham with a politically useful counterpoint. Manchester City Council reports that 4,766 homes were completed in the city during 2025–26, including 901 affordable homes and 439 for social rent. It says 13,555 homes have been delivered since 2022, with a further 7,800 under construction.

The significance is not that Manchester has dispensed with affordable housing, planning obligations or public subsidy. It has not. The difference is one of political and institutional emphasis.

Manchester City Council has deliberately sought to align themselves, the mayoral authority, landowners, developers and investors around a shared growth strategy. Public land, transport investment, regeneration initiatives and partnerships with the private sector have been used to bring sites forward and sustain delivery.

Affordable housing has increasingly been delivered through direct council intervention, grant, public land and partnerships, rather than relying solely on every private development to carry the same proportion of affordable housing.

This approach is not without criticism. Manchester’s city centre housing boom has produced many apartments, but critics say it has not always delivered enough family or affordable homes. Some communities have questioned who has benefited from growth and whether regeneration has displaced lower income residents.

Nevertheless, Manchester has been associated with construction, physical change, and economic growth. Burnham will contrast that record with a London system in which the ambition of planning policy has increasingly diverged from the reality of the number of homes being built.

Burnham’s Rewiring the State programme seeks to turn his experience into a wider model of government, with tax revenues, investment bodies, public-service boundaries and national departments increasingly organised around mayoral geographies.

That is the essence of what might be called “Manchesterism”: not deregulation, and not an abandonment of public benefit, but an emphasis on institutional alignment, negotiated partnership and a focus on delivery.

His technical education proposals follow the same logic. Mayors, employers, schools and colleges are expected to create local training routes into sectors such as construction, addressing skills shortages through place based economic delivery.

In the final part, I will consider what Burnham’s approach tells us about the limits of devolution and whether national housing targets can survive if London continues to be treated as a special case.