Sadiq Khan's ambitious housing target is in tatters after new data revealed that only 6,325 private sector homes broke ground in London during the first three months of 2026. This figure represents just seven per cent of the Mayor's annual goal of 88,000 homes, highlighting a deepening crisis in the capital's housing market.
Research from real estate consultants JLL indicates that developers are reluctant to build due to a glut of unsold stock. Across London, 22,000 properties remain unsold or under construction, with buyers unwilling to invest amid soaring service charges and a 26 per cent newbuild premium. Marcus Dixon, JLL's Head of UK Living & Residential Research, noted that while government and City Hall have taken positive steps on supply, demand-side reforms are urgently needed.
"The government and Mayor have done some really positive things on the supply side," Dixon said. "But we are expecting private developers to deliver the vast majority of homes, and the rate of sale for those homes isn't sufficiently high to convince them to deliver more. There's nothing really in place on the demand side." He called for incentives such as stamp duty reform to encourage purchases of energy-efficient new homes.
London's Housebuilding Woes
Although the 6,325 starts mark an improvement on last year's 5,547, they pale in comparison to the 33,782 private sector starts recorded in 2015. Lord Bailey, City Hall Conservatives Housing spokesman, described the figures as a "catastrophic political failure." He accused the Mayor of blaming external factors while other cities like Manchester have outperformed London in attracting development.
"London has instead become trapped in a culture of delay, bureaucracy and anti-development politics," Bailey said. "Too often City Hall has treated developers, investors and builders as opponents to be managed rather than partners needed to solve the crisis."
City Hall has implemented measures to boost housebuilding, including a controversial package with the Ministry for Housing, Communities and Local Government (MHCLG) that slashes affordability requirements for developers from 35 per cent to 20 per cent. Deputy Mayor for Housing Tom Copley expressed confidence that these policies will start to bear fruit in 2026.
Developer Hesitancy and Costs
JLL highlighted that London's high proportion of flats adds risk for developers, as building a block requires completion before any units can be sold. Additional levies like the Community Infrastructure Levy and Mayoral Infrastructure Levy further inflate costs. Dixon suggested that City Hall could show flexibility in delivery and engage with ministers on stamp duty reform.
Nationally, the Conservative Party has pledged to abolish Stamp Duty Land Tax on primary residences if they form the next government. A government spokesperson defended current policies, noting that first-time buyers pay no stamp duty on homes up to £300,000 and that stamp duty raises £14 billion annually for public services.
The Mayor's spokesperson reiterated Khan's commitment to tackling the housing crisis, citing a record £11.7 billion London Social and Affordable Homes Programme and a new City Hall Developer Investment Fund. "We are confident that new time-limited emergency housebuilding measures will ramp up housebuilding in London and bring forward thousands of homes more quickly," the spokesperson said.
