There are fresh doubts about Labour’s 1.5 million homes target, with one of Britain’s biggest housebuilders warning that developers can’t justify investing in new London sites after a major housing scheme was blocked.

Berkeley Group issued the warning after a planning inspector rejected proposals for 867 homes in Peckham for a second time, despite accepting the scheme would help tackle housing shortages and deliver wider social and economic benefits.

The brownfield development would have replaced an 80s shopping mall, the Aylesham Centre (main picture), with hundreds of new homes.

However, the inspector concluded that the impact on nearby heritage assets outweighed the benefits of the scheme.

This is why developers, including Berkeley, can no longer invest in new London sites and the housing crisis continues to deepen.”

Rob Perrins (main picture), Executive Chair of Berkeley Group, told the Times: “This is why developers, including Berkeley, can no longer invest in new London sites and the housing crisis continues to deepen.”

He also questioned how ministers expected developers to deliver large numbers of homes if major regeneration schemes on allocated brownfield land keep being blocked. He added that if it continued, pressure would inevitably build on greenfield and Green Belt land instead.

Council welcomes ruling

Southwark Council leader Sarah King, however, welcomed the planning inspector’s ruling, saying local concerns about the design had been vindicated.

The news comes amid growing concern about a collapse in housebuilding activity in the capital. Industry figures show just over 2,100 residential starts were recorded in London during the first quarter of 2026, far below the levels needed to meet the Government’s housing targets.