Dozens of new-build projects in London have been abandoned as the Government faces claims it is set to miss its housebuilding targets.
In an echo of the financial crisis, construction sites across the capital are being boarded up.
According to a report by Molior Consultancy, work has stopped at one in six housing construction projects, including developments with more than 20 private homes.
Those projects would have provided up to 5,400 homes, the research suggested.
Weakening buyer demand combined with the long-term effects of inflation and rising costs have created a perfect storm in the housebuilding sector.
Experts told The Telegraph that stalling construction was “devastating” and claimed it showed Labour was “nowhere near” hitting its housing promises.
It comes amid reports that Steve Reed, the Housing Secretary, and the London Mayor Sadiq Khan are preparing to use “emergency” measures to kickstart flatlining housebuilding.
In north-west London, the shadow of Heron House in Brent looms over the street. Its padlocked gates are overgrown with weeds, and the only sign of ongoing work is a board with the words “supported by the Mayor of London” written on it.
The Heron House site was expected to deliver 40 affordable homes – Jamie Lorriman
The large construction project was supposed to provide 40 affordable homes once finished, but it remains covered in white tarpaulin from top to bottom. According to Molior Consultancy, the site has not progressed since 2022.
Not far from Wembley Stadium, another development, Afrex House, is in a similar state. It’s run-down with greenery sprouting through the fences surrounding the site.
Property sales are this year forecasted to hit lows not seen since the financial crisis.
In the two years following the 2008 crash, sales remained below 10,000 a year. But since then, they have climbed above 20,000 a year, where they remained until 2022.
Sales are expected to plunge well below 10,000 this year, according to Molior Consultancy.
Meanwhile, between 2015 and 2020, there were between 60,000 and 65,000 homes for private sale or rent under construction in London at any given moment.
But by the beginning of 2027, that number is forecasted to fall between 15,000 and 20,000.
The construction slump raises questions about Sir Keir Starmer’s target of building 1.5 million new homes nationwide and 80,000 new homes in London annually.
Ben Walden-Jones, head of residential development at real estate company JLL, said the sector was in the worst state he had seen since the global financial crisis.
He described how construction on the business’s projects had slowed to a “trickle” after a “death by a thousand cuts”.
“Whereas we usually would have at least two launches a month in London, we now only get about one launch every two months. It’s as low as five schemes a year coming through.
“It’s a trickle. And the number of sales that we’re doing has just collapsed. Our competitors are in the same boat. No one is having any better luck, really.”
Mr Khan overhauled London’s planning regulations in 2016, requiring developers to ensure that 35pc of housing in new projects was affordable. However, a leaked memo from housing officials seen by The i Paper showed that Labour could lower this minimum requirement to 20pc.
‘They were always impossible targets’
The Government is also reportedly considering loosening design standards, such as the requirement for bicycle storage space and the provision of “dual aspect dwellings”, meaning homes with windows opening on at least two external walls.
Robert Colvile, of The Centre for Policy Studies think tank, said: “His plans were stuffed with loads of things that developers could just about cope with in an environment where housebuilding was absolutely booming and they were making huge amounts of money.
“But that’s not the world we’re living in any more,” he added.
“There’s a really simple lesson: the only way you can get builders to build is if they can make money by building. A lot of people on the Left are hugely uncomfortable with that.
“They and many others have been taken aback by the sheer scale of the housing shortfall in London.”
The Centre for Policy Studies blamed the slowdown on Mr Khan’s “misguided” London Plan, the Mayor’s new blueprint for development, as well as excessive affordable housing requirements and the new building safety regulator introduced after the Grenfell Tower disaster.
Discussing whether Labour’s mooted reversals would be enough to restore the sector, Colville said: “I don’t think it’s enough.
“Each of these was the straw that broke the camel’s back. The camel’s back is now broken, so taking off the straws isn’t going to do all that much.”
Tim Craine, director of Molior Consultancy, said: “The key thing with development is that it’s risky. Anything can go wrong, and something usually does. But up until a decade ago, rising selling prices solved any problem.
“When selling prices stopped rising because of the end of quantitative easing, that left everyone quite exposed to shocks. Then, when you add the recent massive build cost inflation, you end up with all these stopped sites and contractors gone bust.”
Craine said Labour’s manifesto promises were “never realistic”, adding: “They were always impossible targets set by people who don’t know how the world works.
“If you went into a boardroom in any business and made the statements they’ve made, you’d have the door shut on you, and no one would pay them any attention.
“It’s drastic. It’s devastating. It’s devastating that homes aren’t being built for rent. The country needs landlords so that young people can live somewhere of their choice, and that choice is disappearing rapidly.”
A spokesman from Octavia, the company behind the Afrex House development, said work stalled in 2023 “following the contractor becoming insolvent”.
It said it “understands the site currently looks unsightly” and added that its priority was ensuring the site “remains safe and secure” as it “reviews the future of the development”.
The company behind the Afrex House development say they’re working to ‘review the future’ of the build – Jamie Lorriman
Suzannah Taylor, executive director of development at PA Housing, which is behind the Heron House site, said work had been stalled since 2022 due to “the insolvency of the original contractor commissioned to construct the project”.
“We are working to appoint a new contractor to complete the scheme and deliver these affordable homes,” she said.
A government spokesman said: “We’ve already increased London’s funding for affordable homes, but with so many Londoners stuck in temporary accommodation or on housing waiting lists, we must look at every lever to tackle the emergency we’ve inherited.
“That’s why we are working with the Mayor on getting the capital building again, including the social and affordable homes Londoners desperately need.
“No decisions have been made on affordable housing requirements in London.”
A spokesman for the Mayor of London said Mr Khan is “working with the Housing Secretary on a package of reforms to boost housebuilding in the capital”.
He added: “The disastrous legacy and underfunding from the last government led to record construction costs, high interest rates, and lengthy delays from the Building Safety Regulator, which created a perfect storm leaving the capital facing the worst conditions for housebuilding in decades.”
