Starmer aims to build 1.5 mn homes, but is the UK buying? London builders tell a slump story

Despite UK Prime Minister Keir Starmer’s plans to build 1.5 million homes, London builders are taking longer to start home construction amid a slump in demand. Analysis of about 700 sites of at least 100 private homes in London by broker Knight Frank showed that the media time taken for a housing project to kick off after getting full planning permission rose to a record 16.3 weeks last year.

This was 31 per cent longer than the time it took to finish a project in 2023 and a whopping 80 per cent more compared with 2018. According to Bloomberg, British housebuilders have been under pressure from higher borrowing costs, crimping supply, while mortgage costs for buyers have weighed on demand.

As per the latest estimation by Bloomberg, 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.

According to Knight Frank’s analysis, which drew on data from researcher Molior London, housing projects in the UK’s capital, London, which began in 2024, took an average of 26 months to start on site from initial planning application. That’s an eight per cent jump since last year and eight days longer than in 2018.

Why the delay

According to the Bloomberg report, the delays have been driven by a lack of staff and funding in local authority planning departments and bottlenecks surrounding the affordable housing push. Not only this, but 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.”

Despite all these challenges, some UK developers have struck an optimistic tone as mortgage costs decline and government measures aimed at unblocking the planning system begin to take effect.

Last week, Persimmon Plc, one of Britain’s biggest housebuilders, said 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, the lowest since 2010, according to Molior.

Amid this, developers in the capital are under increased pressure from regulatory hurdles. According to The Guardian, the British 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. However, this is not sitting well with the developers.

“It is nonsensical to keep ramping up tax and regulation and not expect significant unintended consequences,” Knight Frank’s Barton said while talking about the analysis. “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,” Barton added.