Canada Water plans in doubt, despite steep drop in affordable housing
City Hall approved revised plans with only 9% affordable housing in March 2026, but now phase 2 of the plan is reported to be paused.
It has been reported that British Land has paused work on the second phase of its 3,000-home development at Canada Water due to soaring building costs and low demand for the homes completed in phase one.
The scheme, which spans a 53-acre site in Rotherhithe, is being delivered phase-by-phase, with planning permission needed for each stage.
The Canada Water Masterplan promised a development billed as London’s first new town centre in 50 years with completion of the entire scheme set for around 2036.
British Land declined to comment. The Local Democracy Reporting Service (LDRS) also approached AustralianSuper, which partnered with British Land to deliver the scheme, but had received no response at the time of publication.
Victor Chamberlain, Southwark councillor and executive member for neighbourhoods, strategic planning and wellbeing, said the council is in talks with British Land and other organisations about the future of Canada Water and how investment can be unlocked to create “an affordable, safe and green borough”.
He said: “We recognise the difficult market 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.
“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.”
He added: “We stand ready to work with British Land, the mayor [of London] and ministers to find a way forward that protects local people’s interests. Canada Water remains a huge opportunity for Southwark, and we want to ensure its benefits are realised.”
Developers backtracking on big schemes
The issues at Canada Water come after Landsec’s recent decision to “de-prioritise” its billion-pound redevelopment of Lewisham Shopping Centre because of “exceptionally challenging economic conditions”.
Southwark council granted planning consent for the Canada Water Masterplan in May 2020 for the construction of 2,185 homes – of which 35% would be affordable – along with 4.7m square feet of retail, office and leisure space.
In January 2025, British Land submitted a Section 73 application which allows a developer to make amendments to the original planning consent, due to changes to building regulations and encountering “sector-wide cost and viability challenges”.
In March 2026, City Hall approved British Land’s revised plans, which resulted in affordable housing dropping to just 9% instead of the original offer of 35%.
The Deputy Mayor for Planning, Regeneration and the Fire Service, Jules Pipe, granted planning permission, despite warnings that it would set a “dangerous precedent” for future regeneration schemes.
At the time, British Land said that the first phase of the masterplan had delivered 79 social rent homes, and that more than £10m had been spent on revitalising Canada Dock, including the 170m boardwalk as well as 186 homes at The Founding – a huge skyscraper outside Canada Water tube station.
The second phase of the project was due to start next year and included 150 social rent homes, which British Land said was equivalent to 20% policy compliant affordable housing within this phase of the development.
'Huge question mark over the future of the area'
Colin Boyle, ward councillor for Rotherhithe, said he was “extremely disappointed” by the news. He said: “This has put a huge question mark over the future of the area.
“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.”
Boyle says he has written to British Land asking them to meet with the community to “explain their decision, and what they plan to do next.”
Reacting to the scheme reportedly being paused, Jerry Flynn of the 35% Campaign warned that it was “bad news” for Southwark.
“The Mayor of London should take note and remember this the next time a big developer makes the same argument for cutting affordable housing," he said.
"Developers are queuing up to cut affordable housing to the bone; it will devastate affordable housing delivery across London if they are allowed to do so.”
'Reduction in affordable housing has failed to deliver homes'
Jed Holloway, Planning Solicitor at Southwark Law Centre, said: “The reduction in affordable housing has failed to get homes delivered.
“This comes as no surprise given the principal viability challenges across London are to do with high development values, construction costs, finance costs and low demand for private housing, particularly taller development.”
He added: “This is a point the GLA [Greater London Authority] directly acknowledges, the GLA even accepts that reducing affordable housing and other policy requirements ‘would only have a limited effect in many cases’, and affordable housing can even encourage delivery by reducing market absorption risk.
“With all that in mind, what is the sense in pushing through low affordable housing schemes like this, and looking to lock in lower affordable housing targets in the new London Plan?”
The LDRS approached City Hall for comment but had not received a response at the time of publication.
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