The Home Builders Federation (HBF) have published a new report researching housing delivery in the capital, and finding it at crisis point
London housing delivery is currently experiencing a lack of buyer support, excessive red-tape, unrealistic demands for affordable housing, and unsustainable application delays.
All this combines to create a situation that will require government intervention, say the Federation.
Nearly a third of the 1.5m target needs to be in London
Current estimations project that if the 1.5m new homes target is reached, 440,000 of them are expected to be in London. However, both housing completions and permission approvals have fallen year-on-year.
In the year to June 2025, just 30,000 homes were completed in the capital, down by 12% and below the 2019/20 peak. To meet targets, London housing delivery will need to hit 88,000 homes per year. Planning permissions are also currently at the lowest level since records began in 2006.
The number of starts on site has also dropped by 38%.
Neil Jefferson, chief executive of the Home Builders Federation, said: “The findings of Mind the Gap should be a major wake-up call for Government and the Mayor of London.
“The capital needs an urgent overhaul of housing policy if it is to support the housing needs of Londoners. London Plan policies combined with additional government taxes on new homes, onerous processes to get higher-rise schemes approved and challenging market conditions have effectively made London a no-go zone for housing investment.
“Intervention is desperately needed to support first-time buyers, with Londoners facing the biggest barriers to home ownership in the country.
“If Government is to stand a chance at making its aspirational 1.5 million homes target a reality, ministers must prioritise action to reverse the alarming decline in housing delivery across the capital.”
London is an expensive place to build
A Turner & Townsend report in July found that London is ranked as the fifth most expensive place to build in the world, with average costs of £4,163 per square metre.
This report also highlights that demand is rising for construction in the city, but capacity is not keeping up, with issues such as the skills shortage making construction difficult.
One bright spot for London comes from a different report from Lichfields, which found that Purpose Built Student Accommodation (PBSA), which has contributed an equivalent of 10,500 conventional homes through 26,000 student bedrooms since 2021.
Jonathan Hoban, associate director in Lichfields’ London office, said: “Purpose-built student accommodation plays a critical role in meeting housing need and supporting London’s global education offer. The research identifies a healthy pipeline of schemes with approval which should translate into deliveries.
“Against the poor backdrop for conventional housing in London, the provision of PBSA not only ensures London remains a leading destination for higher education but it could help deliver more affordable homes. It could be a win-win situation for London.
“This is a real opportunity to bring forward the delivery of much-needed homes across the capital. By maintaining a flexible approach in the next London Plan and continuing to champion well-designed PBSA, we can ensure more schemes continue to come forward, helping to meet both student demand and the wider housing needs of London.”
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