Housing secretary Robert Jenrick has dismissed an appeal for the 500-home Camberwell Union development at Burgess Business Park, SE5.
Peachtree Services and Dunnett Investments had proposed 499 homes in 13 blocks of between two and 12 storeys on the four-acre site.
Plans from architects HTA Design included 40,000 sq ft of commercial space and 35% affordable housing, with 119 social rented homes and 54 shared ownership homes.
A planning application was submitted at the start of 2018 and refused later that year. Southwark Council said the density of the scheme exceeded the expected range for the area, with a significant loss of employment space.
Peachtree Services lodged an appeal in May 2019.
Jenrick followed inspector recommendations and agreed that he had concern around the size of homes, wheelchair housing and amount of amenity space.
He said it was not compliant with policy, as it sought to introduce housing to land protected for industrial use.
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