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How many London home permissions are currently underwater?
New home starts in London have sunk. Starts have been ebbing since 2023, but plunged to just 2,148 on sites over 20 private homes in the first half of 2025 – a low watermark even compared to post global financial crisis. Against the government’s target of 88,000 homes per year – this represents just 5% of need; equivalent to just a trickle of water to combat London’s relentless summer heatwaves.
One major kink in the pipeline gaining much attention is the Building Safety Act (2022) which mandates that schemes over 18m pass through three 'Gateway' checkpoints. Gateways 2 requires regulatory approval before construction can commence, and its administration is causing a downstream blockage in starts on high-rise buildings.
The evidence is clear: Less than half of the 2,148 homes started in H1 2025 were on blocks over 18 metres (just 10 schemes), versus 71% for the same period in H1 2019 prior to the Building Safety Act. That is despite 61% of permissions (over 110 schemes) being granted on sites with blocks over 18 metres over the same period, suggesting Gateways 2 is creating a blocker. Outer London saw an 87% drop in starts on taller buildings, reflecting the growing challenge of building at height.
Building at density is essential to meet housing targets. However, higher costs (17% more per £/m2 for 6+ storey flats versus 1-5 storey blocks according to BCIS), fewer off-plan sales and BTR activity helping forward fund projects, and reduced overall market confidence - especially without Help to Buy - are making delivery unviable, particularly in Outer London.
But falling starts and the 10,000 London homes currently stuck in the Gateways process is just the first wave of disruption. How many more homes are in high-rise blocks and will be subject to Gateways 2 planning delays?
New data from Molior has estimated the number of homes in the pipeline that are in blocks over the 7 storey threshold. 700 developments*, totalling 210,000 homes, have received planning permission (full or resolution to grant) since 2019, but have not yet started on site.
There are a whole host of reasons why developers have not commenced development; around a quarter await a S106 agreement, and many will have viability dealbreakers that prevent developers from proceeding, particularly given current low confidence in the sales market. Some of these sites have been stalled so long that their original planning permission may have now expired. Added to this, 86% of these homes are in high-rise blocks which means further complications and delays – including redesigning buildings for second stair core (which could in turn impact viability) and navigating the murky waters of the Gateways process.
Two-thirds of these unstarted homes are in blocks over 18 metres with affordable housing agreements. If unlocked, they could deliver 1.6x the annual housing target and 2.4x the affordable starts target. Delivery of affordable housing has become increasingly reliant on private developers (around half of all affordable homes are delivered through S106), but the challenges across both sectors have seen affordable starts numbers dry up.
Savills expect around 75% of these homes to come forward, as many are parcels of wider masterplans that are underway. But we estimate that 41,000 homes are stalled for 5 years or more, many due to viability constraints – with risks compounding due to the majority (87%) of these permitted homes planned in blocks over 18 metres. Almost 60% of these ‘undeliverable’ homes are in Outer London – the top three boroughs being Croydon, Haringey and Barnet. The expected new build sales value of these homes is around 30% lower than the current London new build asking price average, and would deliver much needed homes at more affordable price points; as housing demand is greatest below £700psf. Back in 2019, lower build and development debt costs and the support of the Help to Buy scheme would have made delivery of these permissions viable, but the tidal wave of increased costs, additional design and fire regulations and lower market support have resulted in these schemes becoming a wash-out.
What needs to happen for these permissions to progress, and will any recent policy announcements help?
In terms of Gateways 2, at the end of June, the Government allocated £2.1m of funding to improve the BSR’s service to ‘unblock delays and boost sector confidence’. We await to see in the next return of public data as to whether this has had a ripple effect on application approval times.
And for those schemes awaiting section 106 sign off? In July, £11.7billion was earmarked for London's affordable housing over the next decade, alongside a ten-year rent settlement, giving affordable housing providers much needed confidence in their future income stream. Leaders from the sector welcomed the announcements and it is likely there will be some improved appetite for S106, although in-house development by housing associations is limited by many scaling down their land and delivery teams, alongside the requirement to retrofit and maintain existing stock.
While the above may not resolve complex viability issues and open the floodgates of development, there is also a cost of treading water. The land market has been quiet for residential activity as values have already adjusted significantly and land owners are unmotivated to sell – particularly as terms have become more complex (for example contingent on planning and Gateways 2 approval). But with a shrinking pipeline of new homes, we are likely to face a supply drought in coming years - just as buyer demand becomes stronger as a result of improved mortgage rates, increased borrowing capacity through relaxed mortgage regulation and a stronger economic outlook. Developers who can swim against the current and get started on site now may find themselves in calmer waters down the line - with less competition and stronger sales rates.