Developers “can no longer invest in new London sites”, the capital’s biggest housebuilder has claimed after its plan to bulldoze an old shopping centre for almost 900 homes was rejected.
Berkeley Group's bid to knockdown the Aylesham Centre in Peckham was dismissed by the planning inspector this week.
The scheme would have seen 867 new flats, 77 of which would be affordable.
While the planning inspector said the development would bring "social and economic benefits" and ease Southwark’s "acute" housing shortage, it ruled this would “not outweigh the harm to the relevant designated heritage assets important to the area”.
Rob Perrins, Executive Chair at Berkeley Group, said: "This decision demonstrates the extreme uncertainty developers continue to experience within the planning system.”
He added: “How can we be allowed to build next to world heritage assets like Tower Bridge, but not here?
"If we’re no longer permitted to meet housing needs on brownfield land then where should we build? It would take hundreds of acres of green belt to deliver this many homes.
"This is why developers, including Berkeley, can no longer invest in new London sites and the housing crisis continues to deepen.
“Decisions that block housing delivery and growth must be challenged, and we will now consider all options open to us."
The push against the development was backed by comedians James Acaster and Nish Kumar, who helped raise money for the fight with a performance at Peckham Levels last year.
Planning Inspector Matthew Shrigley said: "Although the appeal scheme does have some positive design attributes and high order benefits, the elements of harm identified are not outweighed."
He added that even if the 35 per cent affordable housing that Berkeley Group had originally promised was due to be delivered, he still would have found that the level of harm "would not be overridden".
Sarah King, Leader of Southwark Council, welcomed the refusal, describing it as "a great day for Peckham".
She said: "I'd like to personally thank the community who spoke loud and clearly about their concerns.
"We shared those concerns and strongly argued at the public inquiry that the scheme was poorly designed and our position has been vindicated. We will read the appeal in detail and carefully consider our next steps."
Local campaign group Aylesham Community Action (ACA) fundraised more than £55,000 to help pay for a barrister to represent them at the Planning Inquiry, which began in October 2025.
Berkeley had wanted to build 867 new homes, of which 50 would have been available at social rent and 27 intermediate.
A new Morrisons store, as well as other retail and leisure units were also planned across 16 tower blocks up to 20 storeys high.
Peckham Labour MP Miatta Fahnbulleh said the Planning Inspector’s decision was a “big win” for the area.
“This victory belongs to the whole community,” she said.
“We need new homes and investment - but development must work for local people, protect Peckham’s character, and deliver genuine long-term benefit, not just luxury flats. Now the conversation turns to what Peckham needs next.”
But Mr Perrins said: “Housing delivery in London is at an all‑time low, the Government has set clear pro‑housing policy, yet we are still blocked from building homes on a fully allocated brownfield regeneration site in a town centre.
"There is something fundamentally wrong when the Inspector supports our affordable housing offer and wider benefits, recognises the acute local housing need, yet blocks development due to subjective heritage impacts, which we believe are of low harm.
"This is despite nine years of local planning engagement, including the preparation of a joint design brief with the Council and our scheme’s compliance with the Local Plan allocation.
“The Inspector clearly values heritage impacts over housing delivery and this position would make development impossible in just about any town centre.”
