Will the Government’s promise to “build, baby, build” result in the UK’s much needed new homes? Ginetta Vedrickas looks at the situation
It’s been a busy few months for the Government with the exit of former housing secretary Angela Rayner and the appointment of new housing secretary Steve Reed. At a roundtable of key housebuilders and developers to discuss the housing crisis, Reed issued his “call to arms” promising to “build, baby, build” as part of the next phase of getting Britain building faster.
He committed to working in partnership with industry leaders to ramp up housebuilding, focusing on barriers such as the complex planning processes that stand in the way of building the Government’s promised 1.5 million homes, “I want us to build, baby, build, so we can put the key to a decent home into the hands of every single family that needs it. We are doubling down on our plans to unleash one of the biggest eras of building in our country’s history and we are backing the builders all the way. Through major planning reform and investment, we will break down the barriers to development and build the 1.5 million homes this country needs as part of our Plan for Change.”
New report warns of crisis in London
But industry experts warn that Reed’s ambitious target may be unachievable. A new report from the Home Builders Federation (HBF) finds that housing delivery in London is in a “major crisis” and warns that homebuilding targets will be unachievable without intervention to improve the deliverability of homes in the capital. The report pinpoints barriers including a lack of support for buyers; excessive bureaucracy; unrealistic affordable housing demands and delays getting applications approved, which the report explains are “strangling attempts” to deliver the UK’s desperately needed new homes.
The HBF’s Mind the Gap report shows that only 30,000 homes were built in London in the year up to June 2025, down 12% from 2024 and significantly below the 2019/20 peak. Looking ahead to housing projects in the pipeline, planning permissions too have taken a nosedive, explains the report, dropping to their lowest level since records began in 2006, with just 966 projects approved in the 12 months to June 2025.
Adding to the crisis, the overall share of national housing delivery in London has also continued to shrink from 20% a decade ago to just 15% today. Meanwhile, the number of new homebuilding sites starting has plummeted by 38%.
Not just London
The HBF report warns that the housing affordability crisis is affecting the entire country, with a lack of affordable mortgage lending available and, for the first time in decades, no Government support for buyers. Londoners face the highest barriers to homeownership in the country, a first time buyer would need to save 50% of their discretionary income for more than 13 years to afford a deposit, with average deposits now amounting to nearly seven times annual income after bills. The house price-to-earnings ratio stands at 11 in London, compared to 7.7 nationally, and the average cost of a first home is now 17 times the net annual salary of a 22 to 29-year-old.
The crisis is pushing more Londoners out of homeownership and into the private rented sector. Only 15% of first time buyers purchased a home in the capital in 2023/24, a sharp drop from 25% 10 years ago. At the same time, the proportion of households renting privately has more than doubled over the past two decades, while those with a mortgage have fallen from 39% to just 25%.
This suppressed buyer demand for new homes is undermining industry confidence and its ability to invest in new sites and get projects started says Neil Jefferson, HBF’s Chief Executive, who calls Mind the Gap’s findings a “major wake-up call”.
He says, “The capital needs an urgent overhaul of housing policy if it is to support the housing needs of Londoners. London Plan policies combined with additional Government taxes on new homes, onerous processes to get higher-rise schemes approved and challenging market conditions have effectively made London a no-go zone for housing investment. Intervention is desperately needed to support first time buyers, with Londoners facing the biggest barriers to homeownership in the country.”
Cost of housebuilding STOPS new homes being built
A new report from Zoopla says that building new homes is not financially viable across almost half, 48%, of England. The data also found that close to two-thirds, 64%, of the country would also find housebuilding “challenging”. Zoopla’s analysis highlights that it is far from easy to build in the areas that need new homes the most at pricing levels that support more housebuilding. Richard Donnell, Zoopla’s Executive Director explains, “While the Government says it wants to ‘build, baby, build’, our analysis shows that this can only be currently achieved across half the country, in areas that are typically more expensive for consumers to buy. It is much harder for builders to build homes where it’s affordable for homebuyers to buy.”
Building costs increase
Analysis of reports from the UK’s biggest housebuilders shows that the cost of building homes increased by an average of 17% between 2022 and 2024, while average selling prices rose by just 1%. Small and medium-sized (SME) housebuilders, who account for 30% of new build developments in England, are also likely to have experienced higher levels of cost inflation than larger builders.
Zoopla says that the cost of building new home developments has risen quickly in recent years as a result of higher borrowing costs, greater build costs and increasing costs resulting from policy changes, such as the proposed Future Homes Standard, the conditions that housebuilders must meet when building new homes. The report says that demand for new homes is weaker since the Help to Buy scheme ended and mortgage rates increased.
Demand is also weaker in the affordable housing market. Large developers rely on housing associations to buy up to a quarter of their new builds through Section 106 agreements. These legal agreements allow local planning authorities to make planning permission conditional on certain obligations being met by developers, for example specifying that a certain proportion of new homes on a development are designated as affordable homes. However, demand from housing associations has dropped due to issues such as building safety costs and higher borrowing rates.
North, south divide
Zoopla’s analysis also reveals a clear North-South divide in housebuilding’s viability. Higher sales values of new homes in southern England are supportive of development viability, compared to the Midlands and northern England, where sales values are lower relative to the costs of delivering new homes. For example, 64% of southern England has average sales prices at a level that can support the cost of delivering new homes, compared to 13% in the Midlands and 10% in northern regions. However, while the viability to develop new homes is better in southern England, these areas have some of the most unaffordable markets for homebuyers. This limits the pool of potential demand, so sales are slow.
Zoopla’s report recommends key actions to address the problem, which include simplifying the planning process to make it easier to develop land, new funding for housing associations and support for first time buyers to boost demand without inflating prices. Donnell says that, while the Government can’t control the price of raw materials like bricks or concrete, it can influence the rising costs of new regulations. “While recent planning reforms and affordable housing funding are positive steps, they are not a complete solution to boosting new homebuilding. Further reforms are needed to boost capacity and speed at the local planning level and new funding should be focused on immediate, not long-term, delivery.”
Affordable homes stand empty
Another report from the HBF found that around 8,500 affordable homes due to be built in the next 12 months are at risk, as social housing providers such as housing associations are not taking on new Section 106 contracts, causing delays to new homes being built and undermining national housing targets.
The HBF estimates that around 900 completed affordable homes are currently standing empty as social housing providers will not take them on. Housebuilder Chase New Homes is currently experiencing delays at its Cricklewood site as no housing provider has come forward to buy the 38 homes which were designated as affordable, so they currently remain unoccupied, which is also preventing any private homes from being built.
Ginetta Vedrickas
GinettaVedrickashas always had a passion for property. With over ten years of experience working for a local authority housing department, she completed an MA in social policy and housing before training as a journalist at the then London College of Printing. Since then, she has writtenmainly onproperty for most British newspapers including The Independent, Observer, Mail on Sunday, The Times, London Evening Standard and was the editor of Metro’s property section.She’salso written for overseas titles such as AD’s The National and Ireland’s Business Post. Today she freelances for a range of magazines including Showhouse and First Time Buyer.
