London’s Homebuilding Crisis: Policy Challenges, Market Pressures and Solutions
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1) Introduction
London is facing a housing construction crisis. In the first nine months of 2025, just 3,248 homes (source: Molior) began construction – barely 11% of the recent average and under 5% of the government’s annual target. Affordable housing delivery has fallen even more sharply. This collapse is not just a statistical anomaly; it signals a systemic failure with far-reaching consequences for Londoners’ living standards, the capital’s economy, and the resilience of its construction sector.
This research is intended for policymakers, developers, investors, and housing professionals seeking to understand and address the structural challenges facing London’s residential market. It investigates the root causes of the slowdown, from regulatory gridlock and deteriorating development viability to weakening demand and a broken affordable housing model. It argues that London’s current residential development framework, built on assumptions of ever-rising land values, investor-led demand, and rigid planning obligations, is no longer fit for purpose. In response, it sets out a series of urgent policy recommendations and proposes a new, more flexible and responsive housing model.
The crisis also reveals a deeper structural issue: the disconnect between planning policy, market realities, and actual outcomes. This paper highlights emerging ideas that seek to bridge these gaps. Our concept of a more connected model of residential development, and our conviction, Residential: Connected, can support many of these ideas. This model seeks to align public and private sector efforts, link viability with long-term value, and place people and place-making at the centre of delivery. These principles underpin a more integrated, outcome-focused approach that can help unlock stalled sites and rebuild confidence in the system.
How to Navigate This Research
This report is structured to help readers understand both the immediate causes of the slowdown and the deeper structural issues at play. It begins by diagnosing the crisis, then explores the failure of London’s current development model from the current perspective, and finally sets out actionable recommendations for policymakers, developers, investors, and housing professionals.
You can explore each section using the chapter linked via the navigation panel on the right, or you can view the research in PDF format by clicking on the button below. The next chapter provides an overview of the research and our conclusions.
For more information, please contact our Head of Research & Insight, Jon Neale or our Head of Residential, Adrian Owen.
- London’s Homebuilding Crisis: Policy Challenges, Market Pressures and Solutions