Housing Delivery Pressures
Housing delivery remained in the spotlight in Q2 2025 with the number of new starts remaining below completions. The Home Builders Federation reported that housing delivery continues to fall short of the levels required to meet the Government’s 1.5 million new homes target.
Development Challenges
The impact of high land values, increases in construction and labour costs, and the cost of debt, over the last few years, has resulted in fewer project starts. In London, this has been particularly acute with Gateway 2, Building Safety Regulations for projects above 18m, adding another layer of complexity and has delayed projects which has resulted in fewer schemes starting construction. This has also impacted on investor sentiment.
Regulatory Reforms
Positively, the government announced reforms to the Building Safety Regulator in Q2 2025, including a “new Fast Track Process to enhance the review of new build applications, unblock delays and boost sector confidence.”
Funding Support for Supply
Moreover, the Government’s announcements this year of an additional £2bn for its Affordable Homes Programme along with the National Housing Bank, should help stimulate new development and housing supply and could create new opportunities for more mixed-tenure schemes and partnerships. It aims to improve access to long-term financing for projects and should help foster investor confidence.
BTR Pipeline Activity
Over Q2 2025, several Build to Rent (BTR) and Single-Family Rental (SFR) schemes were granted planning permission; a positive indicator for the pipeline in this sector.
Supply-Driven Rental Growth
In the meantime, the shortfall of supply continues to underpin rental growth. This was noted by Zoopla who reported new tenancies rental growth of 2.8% in the year to April 2025 but highlighted that this was a result of weaker demand and ongoing affordability pressures, rather than an increase in rental supply. Average private rents increased 7% in the year to May 2025, according to the ONS; down from 7.4% in April 2025.
