London's first new town in 50 years thrown into doubt as Canada Water scheme stalls

Plans for London’s first new town in over 50 years have been thrown into doubt amid reports that work on the next phase of the Canada Water development has been paused.

The multi-billion-pound scheme, led by British Land and spanning 53 acres in Rotherhithe, pledged to build thousands of homes, offices, shops and leisure facilities over the next decade.

But concerns have now emerged over the future of the second phase of the project, with reports suggesting rising construction costs and weak demand for new homes have forced the developer to rethink its timetable.

British Land declined to comment when approached by the Local Democracy Reporting Service.

Southwark Council has now urged the developer to provide clarity for local residents, many of whom have waited years for promised homes and community facilities to be delivered.

Victor Chamberlain, Southwark's executive member for neighbourhoods, strategic planning and wellbeing, said the council recognised the difficult economic conditions facing developers across London.

"Rising construction costs and weak demand are making it increasingly difficult to deliver new homes, with consequences for jobs, businesses and communities," he said.

"But the need for affordable homes has never been greater. Residents need confidence that the homes, workspace and community facilities promised at Canada Water will be delivered."

Planning permission for the Canada Water Masterplan was granted in 2020. The scheme originally included more than 2,000 homes, with 35 per cent designated as affordable housing, alongside 4.7 million square feet of retail, office and leisure space.

However, revised plans approved by City Hall earlier this year dramatically reduced the affordable housing offer to nine per cent.

The decision proved controversial, with critics warning it could set a precedent for developers seeking to reduce affordable housing commitments amid viability challenges.

The next phase of the development was expected to begin in 2027 and was due to include 150 social rent homes.

Rotherhithe councillor Colin Boyle said he was "extremely disappointed" by reports that work had stalled.

"This has put a huge question mark over the future of the area," he said.

"In the six years since British Land received planning permission, they have only delivered the first phase, while demolishing the cinema, bowling alley, bingo hall and restaurants, running down the shopping centre, and rolling back their commitments to deliver social and affordable housing."

Community campaigners also expressed concern that the apparent pause demonstrates that cutting affordable housing does not necessarily speed up delivery.

Jerry Flynn, of the 35% Campaign, said the reported move was "bad news" for Southwark and argued City Hall should take note when assessing future regeneration projects.

The uncertainty follows a recent decision by Landsec to de-prioritise its planned redevelopment of Lewisham Shopping Centre, underlining the challenging conditions currently facing major housing schemes across the capital.

Southwark Council said it remains in discussions with British Land and other organisations about the future of Canada Water and how investment can be unlocked to ensure the wider regeneration is delivered.