A FTSE 100-listed landowner has shelved plans for a £1.5bn shopping centre project in South London after a local Green-run council refused to co-operate with the plans.

Property giant Landsec, which owns Lewisham Shopping Centre, said it is “deprioritising” its plans to redevelop the site following a row with the local authority over affordable housing. 

Lewisham Shopping Centre will join a growing list of stalled regeneration projects in London, as developers warn that rising costs and local opposition are making building in the capital unviable. 

Landsec’s plans to build 1,744 flats, student accommodation and a new shopping centre on the 17-acre site were approved by Lewisham Council in October last year. 

This decision gave the landowner permission to demolish the existing mall, which has stood since 1977, to make way for tower blocks up to 35 storeys high. 

But the project had recently been engulfed by a row over social housing, after it emerged that Landsec would only be able to make 98 homes available for social rent, with another 231 allocated for discount rates or for social workers. 

Landsec said it had decided to shelve the project after the Green-run council refused to exercise compulsory purchase powers to speed up delivery of the site unless Landsec offered to provide more affordable housing.

Building becomes ‘increasingly challenging’

The property giant said: “Recent statements from Lewisham Council also make clear that the administration is not able to support the next phase of land assembly needed to unlock delivery without a significant increase in affordable housing. 

“This would require material changes to the masterplan resulting in substantial delays to the programme.”

Landsec said it is “no secret” that higher interest rates, rising construction costs and complex red tape are tying the hands of London’s builders, making big projects “increasingly challenging”. 

“This position, combined with the exceptionally challenging economic conditions, mean that we no longer see a sufficiently certain route to delivery and have taken the difficult decision to de-prioritise the redevelopment of Lewisham Shopping Centre to focus on other residential projects,” the firm added.

Landsec’s decision to stall the project was welcomed by some campaign groups, including the Lewisham People’s Assembly, who claimed the redevelopment would have caused “mass displacement”. 

Liam Shrivavasta, the Green Party mayor of Lewisham, said: “I know there were many people who were concerned about this development and will welcome this news. I also know there were many other residents who were looking forward to work starting next year. 

“The fact is the conditions for such developments are simply not favourable right now.”

Earlier this month, housebuilder Taylor Wimpey said the case for major projects in London has “evaporated” because of onerous red tape and planning objections.

Berkeley, another leading housebuilder, has recently hit out at decisions to block its developments in Peckham and Kingston upon Thames. 

Rob Perrins, the firm’s executive chair, said there is a “gulf between positive planning policies and what actually happens when you try to build homes in London. All the policies support housing, but the decisions block it time and time again”.