![\"Aylesham](\"https:\/\/www.europesays.com\/britain\/wp-content\/uploads\/2026\/05\/Aylesham-Centre.jpg\")
\t\tBerkeley’s blocked redevelopment of the Aylesham Centre has sparked fury\t<\/p>\n\t\t\tMonday 25 May 2026 2:44 pm\n\t\t\t<\/p>\n
\t\tBerkeley’s blocked redevelopment of the Aylesham Centre has sparked fury\t<\/p>\n
After its 900-home development in Peckham was blocked, housebuilder Berkeley said it can \u201cno longer invest\u201d in London. Felix Armstrong asks whether development in the capital really has hit a brick wall<\/p>\n
At the Aylesham Centre in Peckham, south London, shoppers are met with graffitied walls, peeling paint and shuttered retail units. The site began life as a Jones and Higgins department store in the 1860s, before opening as a shopping centre in 1988, when it was unveiled by Princess Margaret.<\/p>\n
But the site is now home mostly to empty retail units and welcomes little footfall, save for the huge Morrisons supermarket whose ring-fenced presence at the Aylesham Centre had been one of many battles fought in the war over its redevelopment.\u00a0<\/p>\n
Even Poundland, a stalwart of run-down shopping locations across the country, abandoned the site late last year. Not exactly what you\u2019d expect from a \u201cheritage\u201d asset too valuable to make way for nearly 900 new homes during a housing crisis.\u00a0<\/p>\n
![\"Aylesham](\"https:\/\/www.europesays.com\/britain\/wp-content\/uploads\/2026\/05\/Aylesham-Centre-2.jpg\")
The Aylesham Centre\u2019s redevelopment was blocked on heritage grounds<\/p>\n
Nonetheless a planning inspector last week blocked<\/a> a blockbuster 867-home development here, on the grounds that the project\u2019s benefits \u201cdo not outweigh the harm to the relevant designated heritage assets important to the area\u201d.\u00a0<\/p>\n The plans, submitted by developer Berkeley, which would have also delivered dozens of affordable homes, would have made the single-biggest contribution to London housebuilding this year, after starts last year slumped to among the lowest of any capital city in the world.<\/p>\n The rejection came despite the inspector having accepted that the development would bring \u201csocial and economic benefits\u201d to Peckham and help ease its \u201cacute\u201d shortage of housing. Bizarrely, local councillors appeared overjoyed at the decision, hailing the blocked appeal as a \u201cgreat day\u201d for Peckham.<\/p>\n Developers \u2018can no longer invest in London\u2019<\/p>\n FTSE 100 housebuilder Berkeley was left in a rage. \u201cThis is why developers, including Berkeley, can no longer invest in new London sites and the housing crisis continues to deepen,\u201d executive chair Rob Perrins fumed.\u00a0<\/p>\n Perrins has good reason to be aggrieved. Labour pledged to deliver 1.5m new homes across the country by the next general election, but progress in the capital has been slowed by\u00a0 building cost inflation, more and more red tape,\u00a0 and planning obstructions of the kind seen in Peckham.\u00a0<\/p>\n The government expects 176,000 homes to be built in London in the next two years, but data from January suggests<\/a> a whopping 92 per cent shortfall on this target, as housebuilding progress in the capital has slowed by 84 per cent in a decade. Is Berkeley right to declare an end to viable housebuilding in London?<\/p>\n Quite possibly, according to David Fell, lead analyst at estate agency Hamptons. Housebuilders in the capital have been hit by a \u201cperfect storm,\u201d he explains, of falling sales values and rising building costs.\u00a0<\/p>\n London house prices have been falling<\/a> consistently in recent months, as property experts blame poor interest rate conditions and the impact of stamp duty \u2013 which hits homeowners far more often in the capital than in the rest of the country. On top of this, housebuilders and construction firms warn material costs will continue to rise as the Iran war takes its toll.<\/p>\n In such an adverse environment, \u201cit\u2019s increasingly only higher density residential development that is most likely to remain profitable,\u201d Fell says. But these are exactly the projects which often fall foul of local planning opposition, like the Aylesham Centre.\u00a0<\/p>\n \t\t\t\t\tRead more<\/p>\n \t\t\tRejecting affordable homes means Peckham will get no homes<\/a><\/p>\n High rise blocks can \u201cmake opposition from neighbours more likely and prolong the planning process. Local councillors sitting on planning committees have also shown they\u2019re willing to overrule planning officers\u2019 recommendation for approval where developments are controversial locally,\u201d Fell explains.\u00a0<\/p>\n Planning overhaul \u2018urgently needed\u2019<\/p>\n City Hall has said it will use new planning powers to intervene to stop developments being blocked by local authorities more frequently. London\u2019s Deputy Mayor has said Sadiq Khan\u2019s upgraded planning authority means he will \u201cmake no apologies for his mission to build the homes that Londoners need\u201d. In a major intervention last year, Khan also threw his weight behind building on London\u2019s Green Belt, in an effort to reverse a slowdown in construction.<\/p>\n But City AM understands the Mayor was not able to call in the Aylesham Centre planning dispute because the appeal had gone directly to the planning inspector, whose decisions City Hall is powerless to overrule.\u00a0<\/p>\n Steve Turner, executive director of trade body the Home Builders Federation, urged the government and City Hall to commit to an \u201curgent overhaul of housing policy is needed to support the needs of Londoners\u201d.<\/p>\n \u201cLondon Plan policies combined with additional government taxes on new homes, onerous processes to get higher-rise schemes approved and challenging market conditions have effectively made London a no-go zone for housing investment,\u201d he told City AM.<\/p>\n Economists have also criticised local authorities for expecting housebuilders to ensure a level of affordable homes in their developments which they say puts them out of pocket. \u201cOn occasion profits must to some extent be hoped for rather than banked at the grant of permission,\u201d Southwark Council had written<\/a> in response to Berkeley\u2019s downgrading of its affordable homes quota.<\/p>\n \u201cIf we keep denying that basic economics applies to the housing market \u2013 including the principle that the only way to make homes affordable is to build many more of them \u2013 it will be no surprise that we don\u2019t solve the housing crisis,\u201d Robert Colvile, head of the Centre for Policy Studies (CPS), told City AM.<\/p>\n Building cost inflation looms<\/p>\n Once a housebuilder is given the green light, they then have to buy the bricks. Each of the UK\u2019s six major housebuilders have warned they are bracing for building costs to shoot up as a result of the rising energy costs caused by the Iran war.\u00a0<\/p>\n FTSE 250-listed Taylor Wimpey warned<\/a> last month that cost pressure and shipping surcharges are beginning to hit its supply chain, and Bellway \u2013 which also trades on the FTSE 250 \u2013 said<\/a> in March it fears \u201cheightened risks of supply chain disruption and rising cost inflation\u201d due to the conflict.<\/p>\n Shanker Patel, chief executive of London-based building material supply firm Lords, told City AM the capital\u2019s housing market is also suffering from a dearth of overseas investment.\u00a0<\/p>\n \u201cWe\u2019ve done a great job in driving the foreign capital that was here away, and we\u2019ve ensured that any foreign capital that wants to come here, we\u2019ve made it damn hard work for them to park their money,\u201d he said.<\/p>\n New-build, high rise developments in London are \u201cstuck in a really ominous position,\u201d Patel said. But he believes homebuyers and developers are starting to \u201cget comfortable\u201d with a high interest rate environment, particularly in smaller, family home developments.<\/p>\n \u201cIt\u2019s going to be a while before we\u2019re going to build, build, build in London, [\u2026] but we\u2019re starting to see some green shoots. Anybody who walks the streets of London will see there\u2019s a lot of stuff happening,\u201d he said.<\/p>\n \t\t\t\t\tRead more<\/p>\n![\"Aylesham](\"https:\/\/www.europesays.com\/britain\/wp-content\/uploads\/2026\/05\/Aylesham-Centre-1-1.jpg\")
Berkeley\u2019s plans for the redeveloped site<\/p>\n![\"Aylesham](\"https:\/\/www.europesays.com\/britain\/wp-content\/uploads\/2026\/05\/Aylesham-Centre-3.jpg\")
Southwark Council was slammed after it said it was \u201coverjoyed\u201d at the blocked appeal<\/p>\n