The proposed policy represents more than a simple update. It establishes a strategic expectation that boroughs should introduce affordable workspace requirements for a wider range of commercial development, while continuing to leave many of the most important details; including thresholds, percentages, rental discounts and payment-in-lieu arrangements to local policy.
This article considers how the approach to affordable workspace is proposed to change, what it could mean in practice for applicants and boroughs, and where further clarification/ changes may be needed before the Plan is adopted.
The adopted position: Policy E3
Under the London Plan 2021, affordable workspace is dealt with principally through Policy E3, alongside Policy E2, which together seek to secure suitable low-cost business space for micro, small and medium-sized enterprises. Policy E3 is circumstances-based rather than a general development requirement: planning obligations may be used to secure workspace at rents maintained below market rate for a specific social, cultural or economic development purpose.
The circumstances identified include workspace for sectors with social value, for disadvantaged groups entering a particular sector, or for education and training; sites containing existing or former affordable workspace; areas identified as experiencing affordability pressures; and locations where affordable workspace is needed to sustain a mix of business or cultural uses contributing to local character. The supporting text already allows the space to be secured in perpetuity or for a minimum of 15 years, and to be provided or managed by a dedicated workspace provider, public or private body or charity.
The adopted Plan places significant emphasis on local evidence, encouraging boroughs to develop policies where need and viability justify them rather than imposing a uniform London-wide obligation. The result is a highly varied position across London: some boroughs have detailed thresholds, percentages, rental discounts and minimum terms, while others are more targeted or discretionary. The draft Plan therefore strengthens and formalises much of the existing approach rather than introducing it for the first time, but with important implications for the viability and deliverability of commercial development, as set out below.
The proposed position: Draft Policy GLE7
Draft Policy GLE7 introduces a more structured and directive approach. It requires Local Plans to establish the circumstances in which affordable workspace requirements will apply to applications proposing new Class E(g), data-centre and B8 storage or distribution floorspace, and expects borough policies to identify the relevant geographic areas, the scale of development at which the requirement applies, the proportion sought, the appropriate rental discount and the period for which the space must remain affordable.
The shift in emphasis is significant: where the adopted policy identifies circumstances in which affordable workspace may be appropriate, the draft expects boroughs to establish locally defined requirements for qualifying development. GLE7 does not, however, introduce a single London-wide threshold or percentage, so considerable variation between boroughs is likely to continue. The difference being that a broader range of authorities may now be expected to adopt a formal requirement.
What type and size of development would be affected?
The proposed policy expressly brings new Class E(g), data-centre and B8 storage or distribution floorspace within the range of development for which boroughs are expected to establish locally defined affordable workspace requirements; the adopted Plan established no equivalent explicit expectation for data centres and B8 uses.
That inclusion is potentially significant. Such developments are frequently designed for a single operator and may contain secure yards, specialist infrastructure, loading arrangements, plant, substantial power requirements and operational areas not readily capable of subdivision or independent occupation. The supporting text acknowledges the difficulty, indicating that off-site provision or a payment in lieu may be particularly appropriate here, but stops short of an exemption or a presumption against on-site provision. Without clearer criteria, some authorities may still seek on-site space where it is operationally unsuitable or unviable; a risk shared by pre-let headquarters, laboratories, owner-occupied buildings, secure offices and other single-occupier developments. The final policy would benefit from expressly recognising that on-site provision may not be appropriate where it would conflict with genuine operational, security, management or leasing requirements, and that off-site provision or a payment in lieu may be more suitable for particular uses.
“New” floorspace or “net additional” floorspace - and should there be a minimum area threshold to which the policy applies?
One of the most important drafting issues is the basis on which the requirement would be calculated.
Policy GLE7 refers to applications for “new” floorspace and to affordable workspace being calculated as a proportion of total “proposed” floorspace; it does not state that the requirement should apply only to net additional floorspace. As drafted, a borough policy could therefore calculate the requirement against the total.
The consequences for redevelopment could be significant. In some circumstances it could discourage the renewal of obsolete commercial buildings, impose a substantial new obligation on existing unrestricted floorspace when it is redeveloped, reducing development value and viability. This may penalise schemes where redevelopment rather than refurbishment is unavoidable.
As a general principle, newly generated provision should be calculated by reference to net additional relevant floorspace rather than all replacement or redeveloped floorspace. Although the adopted policy contains no explicit minimum threshold, adopted Policy E2 states that proposals for more than 2,500 sq m of new business floorspace should consider providing flexible workspace or smaller units suitable for SMEs.
A threshold of 2,500 sq m, or major development, could therefore be applied to newly generated requirements. This would be consistent with the existing strategic approach to larger applications, while avoiding disproportionate obligations on smaller schemes.
Replacement of existing affordable workspace
Draft Policy GLE7 continues the protection of existing affordable workspace: where such space exists on a site, or has existed since 1 December 2017, equivalent provision is expected to be re-provided unless it was genuinely temporary or meanwhile use. That replacement obligation is conceptually different from any requirement generated by new floorspace, and in our view the policy should confirm that replacement floorspace counts towards the percentage sought from the wider development.
Without that clarification, applicants face uncertainty and potential double counting; in extreme cases the combination of replacement and newly generated requirements could materially constrain redevelopment, particularly where the history, purpose or affordability of previous occupation is unclear or disputed. Similar issues arise where cultural or creative workspace is protected under Policy GLE5 as well as GLE7.
Therefore, the policy should distinguish between:
- The replacement of existing affordable workspace, which is separately addressed by GLE7; and
- Any additional affordable workspace requirement generated by development, being clear that any replacement affordable workspace should be treated as a credit against this policy requirement.
The final Plan should make clear when the same floorspace can satisfy more than one requirement and ensure the two obligations are not applied cumulatively without proper regard to viability and proportionality.
A broader range of affordable uses - or is it?
One of the more positive changes is that Local Plans may allow a broader range of uses to be delivered as the affordable provision, where supported by local evidence of need and the social, cultural or economic purposes identified in GLE7. Alongside Class E(g) uses, affordable floorspace may support independent food and drink businesses, retail, health uses, crèches, community facilities and cultural-related employment; enabling the provision to contribute more directly to placemaking by activating ground floors, providing local services, supporting cultural production and delivering genuinely mixed-use development.
The supporting text, however, defines affordable workspace relatively narrowly, indicating that flexible Class E permissions should only engage the policy where the physical configuration or intended use is expected to include Class E(g). There is therefore some tension between the narrow term “workspace” and the broader range of qualifying uses. The approach is potentially valuable, particularly for placemaking and town-centre vibrancy, but would benefit from clearer terminology.
A broader concept such as “affordable workspace and affordable commercial, retail or community space” may more accurately describe what GLE7 is seeking to achieve.
It is also worth noting that town centre retail policies may need to be considered when applying this approach, depending on the scale of the use proposed and its location. Therefore, cross references to the impact and sequential tests may be relevant.
On-site provision, off-site provision and payments in lieu
Policy GLE7 allows affordable workspace to be delivered on site, off site or through a financial contribution. That flexibility matters for operationally indivisible buildings and uses that cannot sensibly accommodate separate affordable occupiers, and GLE7 offers some strategic support for alternative delivery where on-site provision is not practical or feasible, or where greater benefits can be achieved through economies of scale, deeper rental discounts or longer duration. It nevertheless leaves boroughs to define when off-site provision or a payment in lieu will be supported, risking the extension of existing variation and uncertainty across a wider range of uses. There is no defined exemption for a pre-let or single-occupier building: a genuine pre-let may support an argument that on-site provision is impractical, but the authority could still seek off-site provision or a payment in lieu.
I our view, the policy should establish clearer strategic criteria specifying that an off-site solution or payment in lieu may be accepted where on-site provision would be incompatible with:
- A bona fide pre-let;
- An owner-occupied headquarters;
- Security or operational requirements;
- Specialist servicing or infrastructure;
- Site-specific constraints, such as a single building reception or access system;
- Laboratory or controlled environments; or
- The efficient functioning of an industrial or logistics facility.
Any pre-let provision would need to be carefully drafted to avoid artificial arrangements designed solely to avoid the policy.
How payment-in-lieu arrangements could be improved
In some London boroughs, existing payment-in-lieu arrangements for affordable workspace can be so expensive or complicated that they are difficult to accommodate within commercial development viability.
A simpler solution would be a published per-square-metre tariff, with each borough setting one or a small number of rates based on viability evidence and reviewed them periodically.
The rate could vary by broad location, ward or use, or even a simpler approach, for example:
- CAZ office;
- other office; and
- industrial or workspace development.
A published tariff would give developers a figure identifiable at land-acquisition stage and substantially greater certainty. Where the standard contribution would make development unviable, or the nature or operation of the proposed use makes it inappropriate, an alternative package of on-site provision, off-site provision and payment in lieu could be agreed on proportionate evidence where equivalent or greater benefits would result.
Payments should be made into a ring-fenced affordable workspace fund and spent in accordance with a published strategy on measures that deliver, improve or safeguard affordable workspace, with authorities monitoring and reporting annually on contributions received, expenditure, floorspace delivered, affordability levels and beneficiaries.
Any such regime would need to come forward through a Local Plan review or a Supplementary Plan, noting that Supplementary Planning Documents may not be adopted after 30 June 2026.
Duration and redevelopment
The draft provides that affordable workspace should be secured in perpetuity or, where that is not feasible or viable, for at least 15 years. The adopted Plan already refers to perpetuity or a 15-year minimum, but the draft places greater emphasis on it as a standard securing mechanism. Perpetuity raises practical questions where buildings are redeveloped, become obsolete or reach the end of their economic life; a fixed maximum term, potentially 30 years, may be a more workable alternative.
Where affordable workspace is secured over the longer term, the final policy and associated guidance should make clear what happens where:
- The building is lawfully demolished;
- Comprehensive redevelopment is proposed;
- Temporary decant space is required;
- The affordable workspace operator becomes insolvent;
- The premises become uninhabitable;
- No eligible occupier can be identified after appropriate marketing;
- The required social or economic purpose is no longer relevant; or
- The agreed rental methodology becomes outdated.
A distinction should be drawn between requiring the benefit of affordable workspace to continue over the long term and requiring a particular unit within a particular building to remain affordable regardless of future redevelopment.
Section 106 agreements should build in flexibility as to the location and form of the space over time. For example, to allow comprehensive refurbishment together with a workable redevelopment mechanism requiring equivalent replacement provision within a future scheme, without allowing the original obligation to sterilise the site.
Management of affordable workspace
The draft anticipates an affordable workspace strategy and management plan dealing with delivery, configuration, fit-out, marketing, management and monitoring. This formalises practice already found in several boroughs and should help ensure the space is usable and properly targeted, but approaches vary significantly and the Plan would benefit from clearer guidance on long-term management arrangements and lifecycle liabilities, so that affordable workspace does not become a long-term detractor from the asset as a whole.
The final policy or guidance should also confirm that transfer to an independent workspace provider is not the only acceptable model. A developer, freeholder or estate manager may be best placed to manage the space directly, particularly within a larger office or mixed-use building with integrated security, access and service-charge arrangements, and direct management should be permitted where the owner can demonstrate appropriate expertise, transparent tenant selection, effective monitoring and compliance with the agreed social, cultural or economic purpose. The policy should focus on securing the required outcome rather than prescribing a single management model.
Rental discounts and wider occupancy costs
The draft appropriately recognises that affordability is not determined by headline rent alone: service charges, fit-out costs, business rates, lease length, repairing obligations, deposits and management charges all affect whether space is genuinely affordable to the intended occupier. A unit offered at a substantial discount to market rent may still be unaffordable if it carries high service charges, significant fit-out liabilities or a lease structure unsuitable for a small or emerging organisation, so affordable workspace strategies will need to address the overall cost of occupation rather than the rental discount alone.
Greater consistency is also needed in the way prevailing market rent is assessed. Whether the comparator is fitted or shell space, prime or secondary accommodation, headline or effective rent, and how incentives, floor level, size and lease terms are taken into account. The supporting text should recognise that providing space elsewhere in the borough, or a smaller amount at a greater discount, may deliver greater planning benefit, and encourage boroughs to accept such alternatives where the benefits can be evidenced.
Variation between boroughs
The draft does not remove the significant variation already found across London. Requirements may be calculated against an uplift in floorspace or against total proposed floorspace; some apply only above a substantial threshold, others to a wider range of major development. Rental discounts range from modest reductions to peppercorn rents, minimum terms from 15 or 20 years to 30 years or perpetuity, and geographic application from defined employment areas, town centres and growth areas to a broader borough-wide approach.
That variation has important viability implications: two similar office schemes on opposite sides of a borough boundary may face significantly different costs depending on the percentage required, the depth of discount, the duration of the restriction, fit-out requirements and whether a payment in lieu is available. Because GLE7 encourages each borough to establish its own detailed framework, it may increase rather than reduce this divergence. There is therefore merit in greater London-wide consistency on viability methodology, market-rent assessment, service charges, payment-in-lieu calculations and the treatment of replacement floorspace - and perhaps “maximum” policy requirements - even if locally specific percentages and geographic priorities are retained.
Southwark: a real-life example
Southwark shows what a fully worked-up borough policy looks like. One of the first to adopt a local policy in February 2022, Southwark’s Policy P31 (Affordable workspace) requires developments proposing 500 sqm or more of employment floorspace to deliver at least 10% of that floorspace on site at a discount to market rent, for at least 30 years. A payment in lieu towards off-site provision is available where on-site delivery is not feasible, but speaking from experience it is wildly expensive. There is no viability clause in the policy itself.
Set against that, three points about GLE7 stand out. First, on duration, the draft's fallback of at least 15 years is half Southwark's 30-year requirement. GLE7 is a floor rather than a ceiling, but we should watch the boroughs that already go further. They will want to be confident it is not read as the new norm on appeal or in viability negotiations. Second, GLE7 is largely silent in policy terms on who manages the space. Southwark's experience suggests the approved-provider requirement, rather than the percentage, is what determines whether workspace is genuinely affordable in occupation; paragraph 4.68 gets close, encouraging early engagement with providers and leases at rates that allow providers to operate at sub-market rents, but it sits in supporting text. Third, Southwark's Old Kent Road Opportunity Area is exactly where the extension to B8 and data centre floorspace will bite. The area is bringing forward multi-storey logistics alongside affordable workspace, and a requirement calculated from warehouse floorspace raises very different design, servicing and viability questions from one calculated from offices.
Viability, commercial development and Community Infrastructure Levy
Affordable workspace represents a transfer of commercial value and can have a material effect on development viability.
The impact will depend not only on the proportion of floorspace required, but also on:
- The depth of the rent discount;
- The length of the restriction;
- Whether the space must be fitted out;
- Responsibility for service charges and business rates;
- Management and monitoring costs;
- Void and tenant-failure risk;
- Restrictions on eligible occupiers;
- The valuation yield applied to the restricted space; and
- Whether the obligation affects funding or investment value.
A requirement for 10% of floorspace at 80% of market rent for 15 years is materially different from the same quantum at a peppercorn rent in perpetuity. This matters most where office development is already marginal or where replacement development is needed to modernise ageing stock. If the policy is intended to support London’s economic growth, it should be calibrated so that it does not prevent delivery of the wider commercial floorspace from which the affordable provision is expected to arise. The Mayor and boroughs should also consider, through future reviews of their CIL charging schedules and supporting viability evidence, whether a nil or reduced rate for qualifying affordable workspace would be justified, to avoid CIL undermining the viability of the very floorspace that policy seeks to secure.
Cross-cutting policy themes
Draft Policy GLE7 should be read alongside the draft Plan’s wider economic, cultural and placemaking policies. Policy GLE1 seeks to ensure sufficient and appropriate employment floorspace is delivered to support London’s economy, and affordable workspace requirements will need to be balanced against that objective, particularly where commercial development is marginal or dependent upon a pre-let. Policy GLE5 strengthens the protection of cultural production and creative workspace, including within Creative Enterprise Zones; where existing cultural facilities are affected, equivalent space with similar affordability may be required, and the relationship between that obligation and any separate GLE7 requirement should be clearly addressed to avoid duplicative or unduly onerous requirements. The town-centre and placemaking policies help explain why affordable provision may include independent retail, food and drink, health, community and cultural uses - which, used carefully, could maintain diversity and activity where market rents would otherwise result in a narrow range of occupiers. The purpose and beneficiaries should nonetheless be clearly evidenced; a generic requirement is no substitute for identifying a specific local affordability problem or economic objective.
What this means in practice
The direction of travel is towards a stronger strategic expectation that boroughs should introduce affordable workspace requirements for Class E(g), data-centre and B8 storage or distribution development.
However, this is not a single London-wide affordable workspace standard.
The draft continues to leave the threshold, geography, percentage, rental discount, duration and detailed approach to off-site provision and payments in lieu to individual boroughs. It may be prudent for the plan set maximum limits on these issues to ensure a pragmatic approach.
For applicants, the key questions will include whether a requirement is calculated against gross proposed or net additional floorspace, whether existing affordable workspace must be replaced in addition to newly generated provision, and whether on-site delivery is genuinely practical.
For data centres, logistics buildings, pre-let offices and other single-occupier development, the availability and calculation of off-site provision or a payment in lieu may be particularly important.
For boroughs, the challenge will be to adopt requirements that are supported by evidence of local need and viability while avoiding obligations that prevent the delivery or renewal of commercial floorspace.
The broader range of uses that may benefit from affordable provision is a positive feature of GLE7. Properly applied, it could support independent businesses, cultural production, community facilities, active ground floors and more locally distinctive places.
However, the policy would benefit from further refinement before adoption.
It should clarify that newly generated requirements should normally be calculated against net additional relevant floorspace rather than all redeveloped or replacement floorspace.
It should distinguish the replacement of existing affordable workspace from additional provision generated by development and prevent double counting between GLE7 and related cultural policies.
It should also establish clearer circumstances in which off-site provision or a payment in lieu may be accepted, including where on-site delivery would conflict with a genuine pre-let, single-occupier operation, security arrangement or specialist commercial use.
The policy should permit developers and landowners to manage affordable workspace directly where the required outcomes can be secured and should include workable provisions for redevelopment, prolonged vacancy, operator failure and changing economic need.
Greater consistency is also needed in viability methodology, rental valuation, service-charge treatment, fit-out requirements and payment-in-lieu calculations.
The strategic objective of widening access to affordable commercial, cultural and community space is positive.
The test for the final policy will be whether it can secure genuinely useful and affordable space while also supporting the viability and renewal of London’s wider commercial development market.
The London Plan 2021, including Policy E3, remains part of the statutory development plan and continues to provide the basis for decision-making.
The draft Plan is an emerging material consideration, with limited weight. Going forward, the weight attributable to it will depend on its stage of preparation, the extent of unresolved objections and its consistency with national policy, and should increase as it progresses towards adoption.
Consultation responses may be submitted until 15 October 2026, with adoption currently expected in 2028.
