A London council has signalled that it is to backtrack on proposals to prevent developers from selling homes to people from outside the borough, writes David Blackman.

Kensington and Chelsea council published a paper in November 2005 proposing that new dwellings should be limited to residents, or people who had a connection with the borough.

However the council’s proposal prompted concern among developers and agents that this would dampen demand and cut off the supply of development.

A spokesperson for the council told Building this week that the authority would take note of the negative response that its proposals had generated when it published its development plan for the borough in spring.

Paul Callcutt, land director at Crest Nicholson, pictured right, who wants the council to drop the idea, said: “In the areas where we work, this is not a credible proposition. If they did this, especially in London where values are high, it will simply stop development. You have to maintain the inducements for private development to go ahead. If you don’t, you get 100% of nothing. You can’t kill the goose that lays the golden egg.”

A council spokesman said: “Whether the council will pursue the ‘local needs’ housing policy is not yet in the public domain.

You can’t kill the goose that lays the golden egg

Paul callcutt, Crest nicholson

“However, the council will be mindful that the results of the issues and options consultation showed that the local homes option only received 24% support from the community, whereas 44% supported the development of as much new public and private housing as possible to increase supply.”

Such locals only restrictions on housing developments are increasingly common in national parks, such as the Lake District and the Peak District.

The west London borough, which has the UK’s least affordable housing, is the first non-national park local authority to propose such a clampdown. The proposal was prompted by a combination of high demand for housing and limited supply of land within the borough.

The average price of a typical two to three bedroom home in Kensington was more than £705,000, according to Land Registry figures for 2005. The Josesph Rowntree Foundation found that the average household income in this area of London was £91,000 and calculated that the ratio of house price to earnings was 7.72:1, the highest in the country.

Much of Kensington and Chelsea is difficult to develop because it is covered by conservation laws but large development sites are becoming available as redundant and under-used sites along the London Underground route running south from Kensington High Street begin to come on the market.