Southwark Council is looking into the possibility of launching a legal challenge to gain the right to set affordable rent levels within the borough.
The move follows rule changes to the London Plan that would allow developers to set rent levels of 80 per cent market rates and still classify their properties as “affordable” for the purposes of quota requirements in planning applications.
Southwark and eight other London authorities objected to London Mayor Boris Johnson’s restrictions in the amended plan.
Their views were supported by Planning Inspector Geoff Slater, who said the amendments were overly prescriptive and called for their deletion.
Southwark said it currently set social rent at around 40 per cent of market values and that rents of 80 per cent, tagged at around the £1,000 mark, could not be considered “affordable for the majority of residents”.
Councillor Fiona Colley, the borough’s regeneration lead, said councils needed “every power” to ensure rent levels were affordable and appropriate for their residents.
“We are very keen to seek a judicial review of this decision,” she said.
"Maybe there are some areas of London where rent levels of 80 per cent of market rent are affordable to most people, but they certainly aren't in Southwark.
“The implication of the mayor's decision is that councils will have little power to make sure new affordable housing is really, genuinely affordable for local people."
A statement from the Mayor’s office said that allowing individual boroughs to create their own affordable-rent caps would “have the negative effect of driving away vital investment and reduce the number of homes built”, worsening the capital’s housing shortage in the process.
"We've already surpassed one degree of global warming," said Kristen Buida, manager of the London Climate Change Partnership.