"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"
- Neil Jefferson - Home Builders Federation
The Home Builders Federation (HBF) is calling for urgent government intervention to prevent housing delivery in London from collapsing.
A new report released by HBF shows that just 30,000 homes were completed in the capital in the year to June 2025, far below the 440,000 needed to contribute to the government’s 1.5 million new homes target by 2030. Year-on-year figures for planning permissions and housing approvals are also declining.
The publication, Mind the Gap, highlights that the latest annual London figure, based on the number of new properties issued with energy performance certificates, is 12% lower than last year and “significantly” below the peak recorded in 2019/2020.
Planning permissions in London have “nosedived” to their lowest levels since records began in 2006, with only 966 projects approved in the 12 months to June. Over the past decade, the capital’s share of national housing delivery has fallen from 20% to 15%.
New site starts have also dropped by 38%. HBF warned that under the government’s standard method, output would need to rise 175% to meet the 88,000 homes per year London requires, “casting serious doubt on the city’s ability to meet future needs and make the required contribution to the government’s 1.5 million homes target.”
The report outlines several factors behind London’s declining housing delivery. Planning delays are prolonged by the complexities of the London Plan, which includes 88 separate residential policies alongside local and national rules.
High-rise projects are further affected by the Gateway approval process of the Building Safety Regulator, which has held back nearly 10,000 homes for over six months as of mid-2025. Additional policy costs, such as second staircase requirements, carbon offset charges, the mayoral construction infrastructure levy, and biodiversity net gain legislation, are also limiting output.
London’s 35% affordable housing requirement remains a significant constraint, with registered providers often unwilling to take on section 106 units. Affordability pressures are acute, with first-time buyers needing to save 50% of their income for more than 13 years to afford a deposit. In 2023/24, only 15% of first-time buyers purchased a home in London, down 25% from ten years ago. HBF said this suppressed demand is undermining industry confidence and investment.
To address the crisis, HBF is urging the government to reintroduce a targeted home ownership scheme following the end of Help to Buy. The federation is also calling on the mayor of London to accelerate the assessment of green belt land for development, reduce the affordable housing threshold to 25%, and simplify the London Plan to align local energy policies with national regulations.
HBF also recommends cancelling the Building Safety Levy, addressing delays in the section 106 market, and tackling electrical capacity constraints, all of which are further hindering new housing delivery.
Neil Jefferson, CEO of NHBC, 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.”
