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The Westminster City Plan: Creating Rarity Value for Large-scale Apartments?

The Westminster City Plan 2019-2040, formally adopted on 21 April 2021, sets out policies that will determine all future planning applications in Westminster for the next nineteen years.

It has been one of the most highly anticipated local authority policy documents of recent years, but one aspect of the plan has raised questions amongst property investors and developers.

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What Does the Plan Aim to Achieve?

Westminster is one of the capital’s largest boroughs, extending from St John’s Wood in the north to Pimlico in the south. This area is densely populated area (with 12,000 residents per square mile compared to the London average of 5,700) but is, understandably, also a place of sharp contrasts, where pockets of less wealthy communities are found within walking distance of some of London’s most expensive homes.

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Westminster Council’s commitment to providing priority housing for less wealthy residents has been demonstrated by their choice-based lettings scheme, which has been operating in Westminster since 2004.

Therefore, it is not surprising to hear that the council aims to provide more affordable apartments and houses for sale under the new Westminster City Plan.

Under the Plan, the current minimum percentage for developing new, affordable Westminster real estate is set to increase, rising to 35% for new developments or 50% if homes are built on land owned by the public sector.

In recent years the borough has been keen to show that it is pushing back against the ambitions of super-rich developers and homeowners.

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In 2016 it introduced rules to limit the size of basement developments, and it has also rejected some high profile planning applications. One example is the Qatari royal family’s plan to combine two Grade I listed mansions in Regent’s Park into a lavish palace with 17 bedrooms and 14 lounges.

Westminster Council also aims to create a positive environment for business growth and improve retail and cultural offers whilst enhancing the area’s built and natural environment. Another important aim is that of reaching carbon neutrality by 2040. The Plan states that all significant developments must be zero-rated for carbon, with a payment system in place to offset any emissions above zero.

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Why is Westminster’s New Homes Policy Creating Controversy?

One of the more controversial aspects of the plan is the decision to cap the size of any future developments, and in future, they will be limited to just 200 square metres.

The council intends to optimise land use by encouraging the construction of more individual units. However, their decision, which effectively rules out the construction of super-apartments, has implications for the prime and super-prime property market.

Going forward, there will be two choices for buyers in Westminster: either purchase one of the smaller properties that will become available through new development projects or buy existing housing stock.

 

Creating a Rarity Value for Large-scale Properties

Over the past few years, developers have been busy building apartments that exceed the 200 sqm minimum size in anticipation of the rule change. They are aware that the size limitation for future developments has the potential to drive up the value of existing large-scale properties in Westminster.

At the same time, the desirability of larger homes has been further enhanced during lockdown: spacious, light-filled properties with home office rooms and views over open green spaces are now greatly in demand. Owners of super-sized apartments in Westminster are therefore likely to see a significant rise in the value of their properties in future. This is likely to create a two-tier market where the price per square foot of homes in excess of 200 square meters are likely to be higher than those sub-200 square metres. This would suggest a potential higher capital value gain for those who purchase these homes now while there is still new supply in the marketplace.

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Berkshire Hathaway HomeServices London is one of the leading estate agents in London. As specialists in luxury property, we have been watching recent developments with interest.

If you are interested in large residential properties in the City of Westminster area, either as a home or an investment, we would be delighted to advise you on your search.

W_katy Kayco

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