London homebuilders putting off projects for longer amid slump
The UK is likely to fall about 25% short of the 300,000 new homes it needs this year to meet its five-year target of 1.5 million homes
[LONDON] London builders are taking longer to start home constructions after receiving permits, as a slump in demand threatens to derail the government’s plan to build 1.5 million homes.
The median time taken for a housing project to kick off after getting full planning permission rose to a record 16.3 weeks last year, according to an analysis of about 700 sites of at least 100 private homes in London by broker Knight Frank. That is 31 per cent longer than in 2023, and is up by more than 80 per cent compared with 2018.
Housebuilders have been under pressure from higher borrowing costs, crimping supply, while mortgage costs for buyers have weighed on demand. The UK is likely to fall about 25 per cent short of the 300,000 new homes it needs this year to meet its five-year target of 1.5 million homes, Bloomberg News reported in March.
London housing projects that began construction in 2024 took an average of 26 months to start on site from initial planning application, according to Knight Frank’s analysis, which drew on data from researcher Molior London. That is 8 per cent higher than a year earlier and eight days longer than in 2018.
Those delays have been driven by a lack of staff and funding in local authority planning departments, and bottlenecks surrounding the affordable housing push, the broker said. Costlier stamp duty, higher mortgage rates and tax changes impacting buy-to-let investors have also weakened demand and reduced developers’ confidence to build.
“This data should be a serious wake-up call for politicians,” said James Barton, head of London land agency at Knight Frank. “It sheds light on the realities of development – increasing delays to planning and a dramatic fall in start on sites signals a new low for the market.”
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Still, some UK developers have struck an optimistic tone this summer, as mortgage costs climb down and government measures aimed at unblocking the planning system begin to take effect. Persimmon, one of Britain’s biggest housebuilders, said last week that it was on track to sell more homes this year and in 2026 on rising optimism around a recovery in transactions.
However, only 3,950 new homes were sold in the first half of 2025 in London, according to Molior, the lowest level since 2010, with developers in the capital under increased pressure from regulatory hurdles.
The Treasury is now examining the possibility of replacing stamp duty and introducing a new tax on the sale of UK homes worth more than £500,000 (S$865,050), The Guardian reported this week, a move that could risk further weakening demand.
“It is nonsensical to keep ramping up tax and regulation and not expect significant unintended consequences,” Barton said. “There is still huge demand and need for more homes to be delivered in London, but the current system is not effective and too rigid, with local and central policy creating an environment that is simply too high a risk for developers.” BLOOMBERG
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