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Developers flee the London Plan

Many of the UK's biggest residential developers are deserting the capital, citing Ken Livingstone's London Plan as the cause, the AJ has learnt.

RIBA councillor Valerie Owen - the boss of business quango London First - said she knows numerous developers who believe the plan has triggered planning-gain demands that make the capital unviable.

She is concerned that local authorities are using the 50 per cent affordable homes target set out in the London Plan for all new residential schemes as 'a weapon to use on residential developers'.

Owen's concerns are also supported by the latest findings from data firm London Residential Research, showing a 50 per cent jump in the number of Section 106 agreements last year.

'I have had a series of phone calls in the last few months from developers warning that they are going to complete their existing projects and then up and leave the capital, ' she said.

'The London Plan has driven away many of the best developers from the capital to other regional cities, ' Owen added. 'It is proving very difficult to get them to stay.'

Berkeley Homes' group planning executive Brian Salmon echoed Owen's comments. 'This is a problem we are aware of, ' he said. 'It has become like a battle between the developers and the local authorities.

'We are very determined to stay working in the capital. But there are quite a number of developers - some of them very big - that are leaving London and are not keen to return, ' Salmon added.

And the chair of the London Planning Forum think tank, Brian Waters, agreed that the situation 'is pretty desperate'. 'It is certainly true that the affordable homes targets are putting a lot of developers off from working in the capital, ' he said.

'The moment a developer gets its hands on a plot of land it is whacked with a massive demand for homes, 'Waters added. 'The London Plan and various local authorities are in the process of killing the golden goose.'

However, Ken Livingstone's office dismissed the criticism. 'The 50 per cent target is vital to London, is what Londoners need, and is fully endorsed by the independent panel report into the draft London Plan, ' a spokeman said. 'The London First claims are based on anecdotal evidence that we have not seen. The mayor is, however, satisfied that these are not concerns that developers and housebuilders are raising with him or his officers in our discussions with them.'

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