Samuel Hughes is an editor at Works in Progress and a fellow of the Centre for Policy Studies.
Over the last three years, housebuilding in London has collapsed. The housing research company Molior recorded just 2,158 private starts in the first half of 2025, around five per cent of London’s (low) targets, and still falling; 23 of London’s 32 boroughs recorded no starts at all on sites with more than twenty homes. London’s per capita build rates are far below those of any other region.
What is going on? I have posed this question to numerous specialists, most of whom cannot comment publicly for professional reasons. An extraordinary picture of regulatory failure emerged, illustrating much about the government of modern Britain.
The headline reason for the collapse of housebuilding is the establishment of a quango called the Building Safety Regulator (BSR), whose approval has been required since April 2024 (after a transitional period starting in 2023) for all tall buildings.
The BSR immediately became heavily backlogged, so many projects that would have started over the last year are stuck in the enormous queue of applications waiting for the BSR’s attention. Because a far higher share of new builds are apartments in tall buildings in London than elsewhere, this disproportionately affects London.
I originally thought this was the main cause of the current crisis, which made me relatively relaxed about it, since after all the Government can solve the backlog by simply increasing the BSR’s capacity. It has indeed since done this. Unfortunately, however, things aren’t so simple.
One problem is that the BSR not only approves applications slowly – it generally doesn’t approve them at all. In fact, the BSR rejects about 70 per cent of applications to begin construction. This is a staggering figure; the British planning system (itself not always a model of predictability!) rejects just 10-15 per cent of applications, and even fewer on large sites.
Rejections cause delays, which are wildly expensive for developers, so they expend enormous resources on getting their applications right. If 70 per cent of them are still getting rejected, it suggests developers either don’t know how to meet the BSR’s standards, or simply can’t do so. This is an alarming situation. We can only hope that the guidance the BSR is belatedly publishing will lead to dramatic improvements.
The next problem will be familiar to some readers: the second staircase regulation, which requires that all tallish buildings have at least two staircases, eating up much of their floorplate.
The fascinating thing about the second staircase rule is that the Government has always known it is a bad regulation: the Government’s own cost-benefit analysis found that its costs are 294 times greater than its benefits. The entire system was tacitly aware that it was introducing a rule with almost no safety value and huge economic costs, and it introduced it anyway. When the dust settles, it will be worth studying how this can possibly have happened.
Second staircase rules are particularly troublesome in conjunction with anti-corridor policies introduced by the Greater London Authority (GLA), apparently because GLA planners have a kind of aesthetic preference against corridors. Because of the second staircase rule, buildings need to have huge cores of massed staircases and lifts, but because of the absence of corridors, those cores cannot serve many apartments on each floor. This results in a large share of the overall building being made of largely useless cores, which is of course inefficient and value-destroying.
Surprisingly, however, developers universally see second staircases as less important than another, less well known, rule: dual aspect. For a dwelling to be ‘dual aspect’ is for it to have windows on two facades. The GLA’s planners think this is a nice feature for dwellings to have, and so they introduced a citywide presumption against single-aspect dwellings.
The problem with this is that precluding single-aspect dwellings makes it very difficult for buildings to have spatially efficient layouts. For every dwelling to have multiple facades, there need to be a great many facades to go around, so voids and gaps and recesses must be cut in the built volume to create them. The curiously shaped blocks that everyone will recognise from recent London developments are the result; vast quantities of space between the blocks are wasted to satisfy the GLA’s voracious appetite for facades.
The net result of this is to make many sites far less valuable than they would be if developers were allowed to balance the value of dual aspect against the value of more and bigger homes. Once again, this cuts into the incentive for developers to build in the first place.
At this point, some readers may protest – what about macroeconomic forces? The protest is correct, up to a point. Interest rates have risen, making mortgages more expensive and thus depressing buying power; various materials have become more expensive because of wars and sanctions and tariffs; Brexit cut off the supply of cheap builders from Eastern Europe.
The caveat is that all these factors apply more or less equally across England, whereas, as we have seen, the housebuilding collapse has taken place chiefly in London. This should lead us to be sceptical about ascribing too much weight to macroeconomic explanations.
In fact, since floorspace values are so much vastly higher in London than they are elsewhere, London should really be the last place in which viability is threatened by nationwide increases in build costs. The fact that the opposite is true is virtually dispositive evidence that regulatory rather than macroeconomic forces are the dominant cause of the crisis.
We return, then, to bad regulations. Next on the list is leasehold reform.
In Britain, when an apartment building is sold, the fabric of the building and the shared areas are usually owned by a freeholder, while the individual apartments are sold on leasehold. The numerically superior leaseholders persuaded the last government to let them expropriate the freeholds at below their market value, with potentially ruinous consequences for the unfortunate freeholders. They also introduced various other reforms that make freeholds a far riskier and less valuable asset.
The problem with this (aside from its comical injustice) is that it makes it much less desirable to develop apartment buildings. Potential freeholders know that their freehold is liable to be expropriated by the leaseholders, so they are nervous to invest in it. An important revenue stream for builders is thus removed.
In theory, developers are supposed to move over to an alternative ownership structure called ‘commonhold’. Commonhold was introduced in 2002 and is supposed to replicate the condominium ownership structures used in most other Western countries. Unfortunately, commonhold is widely regarded as glitch-ridden and unusable, as a result of which it has had essentially no takeup at all.
(This was why, in fairness to it, the last government planned not to fully implement its leasehold reforms until it had fixed commonhold by introducing various longstanding recommendations from the Law Commission.)
The current government, by contrast, has charged ahead, wrecking Britain’s historic system for multiple ownership of buildings before a new one is in place. As with many of the factors discussed, this disproportionately affects London because of the far higher share of apartment buildings.
One alternative for apartment developers would be to build-to-let. But here too, they encounter regulatory peril. The Renters’ Rights Bill, one of the more bizarre pieces of legislation in recent British history, will effectively ban fixed-term renting: if you let an apartment to someone, you have to let it to them on a permanent basis.
Now as all landlords know, a minority of tenants are badly behaved, damaging the property and blighting their neighbours. Previously, landlords could simply choose not to renew their tenancies when they expired. But after the Bill comes into force, landlords will have to sue them in court to secure an eviction – an arduous and risky process, made worse by the fact that the relevant tribunals are massively backlogged and have wait times of many months. This has a chilling effect on would-be investors in London rental stock.
Needless to say, investors are also conscious of further risks to the rental market in the future. The current leadership of the Government does understand that rent controls are a predictably disastrous policy, and they have no plans to introduce them. But not all Labour politicians are similarly minded, and if the Government did lurch to the left at some point over the next few years, the Renters’ Rights Bill might soon become the least of landlords’ worries.
Another problem comes in the form of the forthcoming landfill tax. At present, potentially toxic landfill is taxed at £126.15 per tonne, while harmless inert waste like soil or concrete is taxed at £4.05, and nothing at all if it is filling up quarries. Almost all landfill from construction falls into the latter class.
However, the Government is proposing to abolish the quarries exception and switch all landfill up to the £126 per tonne rate. For most construction projects, that would be an increase of over 3,000 per cent, thought to be between £22,000 and £28,000 per home.
This affects London more seriously than elsewhere because of the higher proportion of apartment buildings. Apartment buildings have deeper foundations and more basements for bicycles and plant, so they generate much more landfill from excavations. So once again, a huge tariff is proposed on building in London. Although not yet in force, developers are already reconsidering plans in view of the huge costs it would mean for them.
(As a bonus, the tax apparently also threatens the economic viability of much of the quarrying industry, which relies upon inert landfill to discharge its statutory responsibility to fill up disused sites.)
None of this is to mention the various background factors, like the fact that the planning system releases only a thin trickle of sites for development in London, or the enormous ‘affordable housing’ tariffs that the GLA imposes on development. I pass over these because they are not the reasons for the recent fall in development in London – their effect is a constant, and they have not become any more pronounced in the last couple of years.
It should be noted, though, that the housing crisis in London could at any time be alleviated by removing these background blockers. The GLA could always allow housing in place of the low-value commercial sheds it subsidises through its disastrous ‘Strategic Industrial Locations’ policy, and it could always scale back its ‘affordable housing’ requirements to restore viability to schemes ruined by the national government’s recent impositions.
There are sins of omission in politics even as there are in private life, and so the GLA and the borough councils do bear a share of responsibility for the current crisis. Even so, many of its proximate causes originated with the national government.
And so we arrive at the remarkable situation where almost nothing is being built in London. Remember that London is a city where floorspace values are several times higher than they are in most of Britain – higher, in fact, than they have been in almost any time or place in the history of the world. To have made it impossible to build here is an astonishing achievement.
I do not doubt that the Government sincerely wants to build houses. Even the GLA and the borough councils are sort of pro-building, after their own curious fashion. Notwithstanding this, the collapse of housebuilding in London is very largely a crisis of the British state’s own making. Without exactly intending to do so it has attacked on all sides, and finally succeeded in destroying, one of the most powerful housing markets on earth.
Now, nearly all of these factors are specific to London and a few other large cities. Elsewhere, the prospects for building are much brighter. Across the kingdom, planning consultants are furiously at work, drawing up applications to build on green belt sites marked for release under the so-called ‘grey belt’ provisions introduced last year. A wave of greenfield housing estates will indeed begin to spread across the land by the end of this Parliament.
This is, on balance, better than building nothing at all. But if the Government does not act fast, the impact of this will be outweighed by its historic failure in London. The housing shortage is overwhelmingly concentrated in London, and additional homes there have far more effect on housing scarcity and economic productivity than they do elsewhere. If housebuilding remains this low in London, the Government could force a million homes on the shires, and the housing crisis would still be worse at the end of this Parliament than it was at the beginning.
Samuel Hughes is an editor at Works in Progress and a fellow of the Centre for Policy Studies.
Over the last three years, housebuilding in London has collapsed. The housing research company Molior recorded just 2,158 private starts in the first half of 2025, around five per cent of London’s (low) targets, and still falling; 23 of London’s 32 boroughs recorded no starts at all on sites with more than twenty homes. London’s per capita build rates are far below those of any other region.
What is going on? I have posed this question to numerous specialists, most of whom cannot comment publicly for professional reasons. An extraordinary picture of regulatory failure emerged, illustrating much about the government of modern Britain.
The headline reason for the collapse of housebuilding is the establishment of a quango called the Building Safety Regulator (BSR), whose approval has been required since April 2024 (after a transitional period starting in 2023) for all tall buildings.
The BSR immediately became heavily backlogged, so many projects that would have started over the last year are stuck in the enormous queue of applications waiting for the BSR’s attention. Because a far higher share of new builds are apartments in tall buildings in London than elsewhere, this disproportionately affects London.
I originally thought this was the main cause of the current crisis, which made me relatively relaxed about it, since after all the Government can solve the backlog by simply increasing the BSR’s capacity. It has indeed since done this. Unfortunately, however, things aren’t so simple.
One problem is that the BSR not only approves applications slowly – it generally doesn’t approve them at all. In fact, the BSR rejects about 70 per cent of applications to begin construction. This is a staggering figure; the British planning system (itself not always a model of predictability!) rejects just 10-15 per cent of applications, and even fewer on large sites.
Rejections cause delays, which are wildly expensive for developers, so they expend enormous resources on getting their applications right. If 70 per cent of them are still getting rejected, it suggests developers either don’t know how to meet the BSR’s standards, or simply can’t do so. This is an alarming situation. We can only hope that the guidance the BSR is belatedly publishing will lead to dramatic improvements.
The next problem will be familiar to some readers: the second staircase regulation, which requires that all tallish buildings have at least two staircases, eating up much of their floorplate.
The fascinating thing about the second staircase rule is that the Government has always known it is a bad regulation: the Government’s own cost-benefit analysis found that its costs are 294 times greater than its benefits. The entire system was tacitly aware that it was introducing a rule with almost no safety value and huge economic costs, and it introduced it anyway. When the dust settles, it will be worth studying how this can possibly have happened.
Second staircase rules are particularly troublesome in conjunction with anti-corridor policies introduced by the Greater London Authority (GLA), apparently because GLA planners have a kind of aesthetic preference against corridors. Because of the second staircase rule, buildings need to have huge cores of massed staircases and lifts, but because of the absence of corridors, those cores cannot serve many apartments on each floor. This results in a large share of the overall building being made of largely useless cores, which is of course inefficient and value-destroying.
Surprisingly, however, developers universally see second staircases as less important than another, less well known, rule: dual aspect. For a dwelling to be ‘dual aspect’ is for it to have windows on two facades. The GLA’s planners think this is a nice feature for dwellings to have, and so they introduced a citywide presumption against single-aspect dwellings.
The problem with this is that precluding single-aspect dwellings makes it very difficult for buildings to have spatially efficient layouts. For every dwelling to have multiple facades, there need to be a great many facades to go around, so voids and gaps and recesses must be cut in the built volume to create them. The curiously shaped blocks that everyone will recognise from recent London developments are the result; vast quantities of space between the blocks are wasted to satisfy the GLA’s voracious appetite for facades.
The net result of this is to make many sites far less valuable than they would be if developers were allowed to balance the value of dual aspect against the value of more and bigger homes. Once again, this cuts into the incentive for developers to build in the first place.
At this point, some readers may protest – what about macroeconomic forces? The protest is correct, up to a point. Interest rates have risen, making mortgages more expensive and thus depressing buying power; various materials have become more expensive because of wars and sanctions and tariffs; Brexit cut off the supply of cheap builders from Eastern Europe.
The caveat is that all these factors apply more or less equally across England, whereas, as we have seen, the housebuilding collapse has taken place chiefly in London. This should lead us to be sceptical about ascribing too much weight to macroeconomic explanations.
In fact, since floorspace values are so much vastly higher in London than they are elsewhere, London should really be the last place in which viability is threatened by nationwide increases in build costs. The fact that the opposite is true is virtually dispositive evidence that regulatory rather than macroeconomic forces are the dominant cause of the crisis.
We return, then, to bad regulations. Next on the list is leasehold reform.
In Britain, when an apartment building is sold, the fabric of the building and the shared areas are usually owned by a freeholder, while the individual apartments are sold on leasehold. The numerically superior leaseholders persuaded the last government to let them expropriate the freeholds at below their market value, with potentially ruinous consequences for the unfortunate freeholders. They also introduced various other reforms that make freeholds a far riskier and less valuable asset.
The problem with this (aside from its comical injustice) is that it makes it much less desirable to develop apartment buildings. Potential freeholders know that their freehold is liable to be expropriated by the leaseholders, so they are nervous to invest in it. An important revenue stream for builders is thus removed.
In theory, developers are supposed to move over to an alternative ownership structure called ‘commonhold’. Commonhold was introduced in 2002 and is supposed to replicate the condominium ownership structures used in most other Western countries. Unfortunately, commonhold is widely regarded as glitch-ridden and unusable, as a result of which it has had essentially no takeup at all.
(This was why, in fairness to it, the last government planned not to fully implement its leasehold reforms until it had fixed commonhold by introducing various longstanding recommendations from the Law Commission.)
The current government, by contrast, has charged ahead, wrecking Britain’s historic system for multiple ownership of buildings before a new one is in place. As with many of the factors discussed, this disproportionately affects London because of the far higher share of apartment buildings.
One alternative for apartment developers would be to build-to-let. But here too, they encounter regulatory peril. The Renters’ Rights Bill, one of the more bizarre pieces of legislation in recent British history, will effectively ban fixed-term renting: if you let an apartment to someone, you have to let it to them on a permanent basis.
Now as all landlords know, a minority of tenants are badly behaved, damaging the property and blighting their neighbours. Previously, landlords could simply choose not to renew their tenancies when they expired. But after the Bill comes into force, landlords will have to sue them in court to secure an eviction – an arduous and risky process, made worse by the fact that the relevant tribunals are massively backlogged and have wait times of many months. This has a chilling effect on would-be investors in London rental stock.
Needless to say, investors are also conscious of further risks to the rental market in the future. The current leadership of the Government does understand that rent controls are a predictably disastrous policy, and they have no plans to introduce them. But not all Labour politicians are similarly minded, and if the Government did lurch to the left at some point over the next few years, the Renters’ Rights Bill might soon become the least of landlords’ worries.
Another problem comes in the form of the forthcoming landfill tax. At present, potentially toxic landfill is taxed at £126.15 per tonne, while harmless inert waste like soil or concrete is taxed at £4.05, and nothing at all if it is filling up quarries. Almost all landfill from construction falls into the latter class.
However, the Government is proposing to abolish the quarries exception and switch all landfill up to the £126 per tonne rate. For most construction projects, that would be an increase of over 3,000 per cent, thought to be between £22,000 and £28,000 per home.
This affects London more seriously than elsewhere because of the higher proportion of apartment buildings. Apartment buildings have deeper foundations and more basements for bicycles and plant, so they generate much more landfill from excavations. So once again, a huge tariff is proposed on building in London. Although not yet in force, developers are already reconsidering plans in view of the huge costs it would mean for them.
(As a bonus, the tax apparently also threatens the economic viability of much of the quarrying industry, which relies upon inert landfill to discharge its statutory responsibility to fill up disused sites.)
None of this is to mention the various background factors, like the fact that the planning system releases only a thin trickle of sites for development in London, or the enormous ‘affordable housing’ tariffs that the GLA imposes on development. I pass over these because they are not the reasons for the recent fall in development in London – their effect is a constant, and they have not become any more pronounced in the last couple of years.
It should be noted, though, that the housing crisis in London could at any time be alleviated by removing these background blockers. The GLA could always allow housing in place of the low-value commercial sheds it subsidises through its disastrous ‘Strategic Industrial Locations’ policy, and it could always scale back its ‘affordable housing’ requirements to restore viability to schemes ruined by the national government’s recent impositions.
There are sins of omission in politics even as there are in private life, and so the GLA and the borough councils do bear a share of responsibility for the current crisis. Even so, many of its proximate causes originated with the national government.
And so we arrive at the remarkable situation where almost nothing is being built in London. Remember that London is a city where floorspace values are several times higher than they are in most of Britain – higher, in fact, than they have been in almost any time or place in the history of the world. To have made it impossible to build here is an astonishing achievement.
I do not doubt that the Government sincerely wants to build houses. Even the GLA and the borough councils are sort of pro-building, after their own curious fashion. Notwithstanding this, the collapse of housebuilding in London is very largely a crisis of the British state’s own making. Without exactly intending to do so it has attacked on all sides, and finally succeeded in destroying, one of the most powerful housing markets on earth.
Now, nearly all of these factors are specific to London and a few other large cities. Elsewhere, the prospects for building are much brighter. Across the kingdom, planning consultants are furiously at work, drawing up applications to build on green belt sites marked for release under the so-called ‘grey belt’ provisions introduced last year. A wave of greenfield housing estates will indeed begin to spread across the land by the end of this Parliament.
This is, on balance, better than building nothing at all. But if the Government does not act fast, the impact of this will be outweighed by its historic failure in London. The housing shortage is overwhelmingly concentrated in London, and additional homes there have far more effect on housing scarcity and economic productivity than they do elsewhere. If housebuilding remains this low in London, the Government could force a million homes on the shires, and the housing crisis would still be worse at the end of this Parliament than it was at the beginning.