News
Stalling London Construction Demolishes Labour Target
— 3 mins read
London needed 88,000 homes last year but private builders started just 6,325
London started work on just 6,325 private-sale homes in the year to March 2026. That is 7% of the 88,000 homes the capital needs each year, according to property consultancy JLL, whose findings were reported by Property Week.
JLL's report, Fixing London's New Homes Market, blames squeezed buyers, an investor exodus, spiralling service charges, and planning delays for the slowdown.
One point the headlines missed: the 6,325 figure counts private-sale starts only. It excludes homes built by councils and housing associations, so total delivery across all tenures is higher. Several reports described the figure as homes 'built', which overstates what the data shows.
More than 22,000 new homes sit unsold
Housebuilders in the capital are sitting on more than 22,000 unsold homes, according to JLL figures. Around 3,600 are finished and standing empty. Another 18,737 are still under construction.
Developers depend on selling homes off-plan, before a brick is laid, to reassure lenders and fund the next site. A decade ago more than half of London's new builds sold off-plan. In 2025 just 11% did, Business Matters reported.
Without policy change on buying costs, we've simply made new homes unaffordable for buyers.
There are 53% fewer overseas buyers in central London than in 2015. Landlords are heading for the exit too. Only 4% told JLL they would consider buying another buy-to-let anywhere in the UK, after tax rises and rental reforms.
Prices set in the cheap money years
A new build in London costs 26% more per square foot than an existing home.
Those prices were not set by wages. Years of rock-bottom interest rates and cheap loans pumped London property far beyond what ordinary earnings can support. Borrowing costs have since risen, so buyers can no longer stretch to prices inflated during the cheap money era. High rents make it worse by stopping tenants saving a deposit.
First-time buyers used to bridge the gap with Help to Buy, the taxpayer-backed loan scheme that closed in March 2023 after supporting around 390,000 purchases.
Taxes and rules added £76,000 to a new home
Property taxes now swallow 3.7% of everything the UK economy produces, the highest share of any advanced economy.
The Home Builders Federation says building a home costs £76,000 more than in 2020, about 20% of the average price, Housing Today reported. Roughly £39,000 of that comes from taxes, policy, and regulation, including safety rules brought in after the 2017 Grenfell Tower fire. The rest is dearer materials and labour.
Service charges are pricing out buyers as well, because lenders count them in mortgage affordability checks. Average charges have risen 43% since 2020 in blocks with basic extras such as lifts and cleaners. In luxury developments with pools and gyms, they are up 89%.
Who is behind the numbers
Marcus Dixon, JLL's head of UK living and residential research, backs scrapping stamp duty for people buying a home to live in. He said: 'Without policy change on buying costs, we've simply made new homes unaffordable for buyers.'
Labour has promised 1.5 million new homes in England over this parliament. On these figures, London, the region with the biggest housing need, is delivering its private-sale share at a rate of 7% a year.
