London’s private-sector homebuilding pipeline has suffered a dramatic collapse. New analysis reported in January 2026 shows private-sector housing starts fell from 33,782 in 2015 to 5,547 in 2025—an 84% drop over a decade.
That headline number matters because “starts” today become “completions” in future years. When starts plunge, the supply crunch typically shows up later as fewer finished homes, tighter rental availability, and higher pressure on affordability.
What exactly is “housebuilding” here? (Starts vs completions)
The widely cited 84% figure refers specifically to private-sector starts (construction beginning) rather than total homes delivered across all tenures.
A simplified view:
| Measure | What it tells you | Why it matters |
|---|---|---|
| Starts | New schemes beginning construction | Leads supply by ~2–3 years |
| Completions | Homes finishing construction | Impacts real availability now |
Molior’s reporting also notes its London development tracking focuses on schemes with 20+ private homes, which is important context when comparing different datasets.
The scale of the drop, in one table
- 2015: 33,782 private-sector starts
- 2025: 5,547 private-sector starts
- Change: -84% (decade)
The 2025 figure was partially boosted by a late surge in Q4 starts, which suggests developers were trying to time projects—but it did not change the overall trend.
Why London building has stalled: the 5 key drivers
1) Weak sales → fewer financeable projects
Molior links the slowdown to sales/absorption weakness. In its market tracking, sales rates are described as directly contributing to fewer construction starts, and it highlights the gap to what government targets imply.
2) The loss of off-plan investors
Molior argues that off-plan investors historically helped “kick-start” schemes early, but tax and market changes have reduced that demand—removing a key funding signal for new construction.
3) High interest rates + construction cost pressure
City Hall’s comments reported by local press describe a “perfect storm” including high interest rates, construction materials costs, and broader post-pandemic / Brexit impacts.
4) Building Safety Regulator and post-Grenfell delays
Molior explicitly points to Building Safety Regulator issues as time-sensitive because large projects often take more than two years and the approvals pipeline affects delivery schedules.
5) Projects halted mid-build
Molior-referenced reporting in January 2026 describes thousands of homes halted across dozens of sites, often due to contractor failure or deliberate pauses in a weak sales market—both of which stall delivery even after a scheme has started.
What happens next: fewer homes completing in 2027–2028
This is where the “starts” collapse becomes a forward-looking crisis.
Molior forecasts that private completions in 2027–2028 could be extremely low relative to government ambitions, noting only 9,100 private completions forecast across the 24 months and framing that as a small fraction of the target.
It also warns that with fewer new build-to-rent and buy-to-let completions after 2027, London could see higher rents and increased overcrowding as supply fails to keep pace with demand.
Policy response: “emergency measures” and the affordable housing debate
One of the most contentious interventions under discussion has been temporarily lowering the fast-track affordable housing requirement in London from 35% to 20% to restart stalled schemes—paired with greater subsidy and other incentives.
Supporters argue viability has broken and starts must be revived quickly; critics argue it risks locking in fewer affordable homes during a housing emergency.
What this means for Londoners in 2026
If you rent
A sustained low-start environment tends to tighten future rental supply—especially if build-to-rent delivery drops—supporting upward pressure on rents over the medium term.
If you’re trying to buy
A slower new-build pipeline can reduce choice and keep competition high in areas with strong demand, even if broader market conditions soften.
If you care about homelessness and overcrowding
Housing stress is already visible in homelessness metrics reported recently by major outlets, and reduced supply can worsen the pressure on temporary accommodation and affordability.
