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Why are so many London homes approved but not built?

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SUMMARY

So why are so many London homes approved but not built? Because London has accumulated a huge planning pipeline that its development system can no longer turn into construction fast enough: many schemes are approved on paper but are too expensive, too complicated or simply no longer financeable under today’s conditions.

The raw backlog is easy to misuse. Thousands of approved homes belong to giant regeneration projects that were always meant to be delivered over a decade or more, so “approved but unbuilt” does not automatically mean a site is being deliberately left idle.

The more troubling number is the collapse in new construction starts. Planning London Datahub starts fell from 48,962 homes in 2022/23 to 21,665 in 2024/25, while Molior recorded only 5,547 private-sale and build-to-rent starts in 2025.

London is also running out of fresh permissions behind that weaker construction pipeline. Net approvals for self-contained homes fell from 98,299 in 2014/15 to 32,655 in 2023/24, so the city is dealing with both stalled old schemes and too few new ones entering the system.

The evidence does not fit a simple story of developers collecting permissions and refusing to build profitable homes. Private developers, councils and housing associations have all slowed at roughly the same time, which points to a wider viability problem.

Higher borrowing costs and sharply higher construction costs have changed the economics of schemes after permission was granted. A project approved under cheap-money assumptions can become unfinanceable without changing a single apartment in the planning drawings.

Weak home sales make the problem worse. Developers can phase large projects more slowly to protect prices, but once achievable selling prices fall too far relative to land, construction, finance and planning obligations, cutting prices is not a realistic rescue plan.

Affordable housing has become an unexpected bottleneck too. Some schemes require registered housing providers to buy Section 106 units, yet housing associations are diverting money toward repairs, fire safety and their existing stock, leaving developers without the purchaser they expected.

Building-safety approval and infrastructure have delayed real schemes, although neither explains the whole London slowdown. Gateway 2 has started to improve, while cases such as Beam Park show how one railway or infrastructure condition can trap well over a thousand homes despite an existing permission.

Completions have held up better than starts because London is still finishing homes that entered construction in stronger years. That makes the market look healthier from the street than the forward pipeline really is.

The rescue measures are aimed at genuine blockages: cheap lending, targeted investment, CIL relief, faster replanning and site-specific intervention can get some stalled schemes moving. But unlocking a few thousand homes does not solve a pipeline that needs tens of thousands of additional starts every year.

The central failure therefore sits between planning permission and construction. London needs more permissions, but it also needs financeable projects, affordable-housing buyers, infrastructure, workable land values and a faster route through the remaining regulatory steps if those permissions are ever going to become homes.

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Are there really that many London homes approved but still unbuilt?

Yes. London has a very large stock of homes with planning permission that have not yet been completed, but the headline number mixes together very different situations.

Some of those homes sit inside huge regeneration schemes that were always meant to take ten or fifteen years. Others are already under construction. Some are waiting on infrastructure, building-safety approval or a revised Section 106 deal. And some schemes have simply stopped making financial sense since permission was granted.

The distinction is important, but London’s current problem goes beyond an old backlog. The Planning London Datahub recorded 48,962 net residential starts in 2022/23, then 27,386 in 2023/24 and only 21,665 in 2024/25. Molior, which tracks a narrower universe of larger private developments, counted just 5,547 private-sale and build-to-rent starts in 2025.

So plenty of consented homes are moving through a normal development cycle. What is much more worrying is how few new homes are entering construction behind them.

London housing indicator Earlier level More recent level What changed
Net planning approvals 98,299 in 2014/15 32,655 in 2023/24 Down about 67%
PLD residential starts 48,962 in 2022/23 21,665 in 2024/25 Down about 56%
PLD residential completions 38,716 in 2021/22 31,770 in 2024/25 Down much less sharply
Molior private starts 33,782 in 2015 5,547 in 2025 Down about 84%

Are London developers just getting planning permission and sitting on the land?

Mostly no. Developer delay exists in London, but the evidence does not support it as the main explanation for today’s huge gap between planning permission and construction.

The Competition and Markets Authority looked directly at this issue in its housebuilding investigation, including more than 5,800 sites controlled by the 11 largest housebuilders. It found real concerns around land markets and the way major builders control their pipelines, but it did not conclude that widespread deliberate withholding of perfectly viable sites was the main reason Britain builds too few homes.

London gives us another clue. The slowdown is hitting private developers, housing associations, councils and build-to-rent investors at the same time. Those groups have very different incentives, yet starts have fallen across all of them.

City Hall is now spending public money specifically to make stalled schemes work again. Its £324 million Developer Investment Fund is aimed at sites that already exist but cannot move forward on their current economics. That would make little sense if thousands of easy, profitable projects were simply waiting for developers to change their minds.

There is still deliberate phasing, and developers absolutely care about protecting selling prices. But today’s London backlog is much bigger than that.

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How can a London development have planning permission and still be nowhere near construction?

Because planning permission only clears one part of a much longer process. A London scheme can be approved and still lack the conditions, infrastructure, finance or regulatory approvals needed to start properly.

A developer may still need to discharge planning conditions, finalise or implement a Section 106 agreement, secure infrastructure, appoint a contractor, arrange debt, find a buyer for the affordable homes and, for taller residential buildings, clear the Building Safety Regulator.

Beam Park in east London is a good example. The wider regeneration plan covers roughly 4,000 homes and more than 1,100 had already been built, yet around 1,500 further homes were held up by a planning condition linked to the proposed railway station. Government, City Hall, Transport for London, Network Rail, local authorities and the rail operator eventually had to work together through the New Homes Accelerator to find a way forward.

The same issue appears on big brownfield sites where later phases depend on substations, roads, schools, drainage or land owned by another public body.

Section 106 obligations can create another blockage. A development may have consent, but if a housing association no longer wants to buy the affordable units at the agreed price, the financing for the whole scheme can fall apart. Homes England eventually extended its Section 106 Affordable Housing Clearing Service to London because this problem had become widespread enough to need a dedicated fix.

So “approved” can still mean years away from genuinely buildable.

Has London also stopped approving enough homes?

Yes. London now has two housing problems at once: too many approved schemes are struggling to start, and the number of new approvals has also collapsed.

GLA figures show net approvals for self-contained homes falling from 98,299 in 2014/15 to 65,905 in 2019/20, then 35,533 in 2022/23 and 32,655 in 2023/24.

That final figure was roughly one-third of the level recorded nine years earlier.

A large stock of permissions is much less worrying when a city keeps adding fresh schemes and starting construction at a healthy pace. London currently has a shrinking inflow of permissions and a shrinking inflow of starts.

The city therefore cannot solve the housing shortage simply by “using up” old planning permissions. It needs a much stronger new pipeline as well.

Financial year Net self-contained homes approved Change from 2014/15
2014/15 98,299 —
2017/18 80,602 -18%
2019/20 65,905 -33%
2021/22 65,433 -33%
2022/23 35,533 -64%
2023/24 32,655 -67%

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Did higher interest rates really kill approved London housing schemes?

Yes. Higher borrowing costs have made a meaningful number of approved London schemes much harder to finance.

Development money is tied up for years. Developers pay for land, professional fees and construction long before all the homes are sold, so a jump in borrowing costs can wipe out a margin that looked perfectly acceptable when planning permission was first sought.

The timing was particularly bad. Financing became much more expensive while construction costs were also rising fast, and London sale prices were not increasing enough across the market to compensate.

The exact same planning permission can therefore look very different two years later. The number of homes has not changed. The planning obligations may not have changed. Yet the interest bill, expected selling period and required equity contribution can all be much worse.

Government and City Hall now openly include high interest rates among the main causes of stalled London schemes. Looking at the collapse in starts, that explanation fits the data far better than treating financing as a minor excuse.

Have London construction costs risen enough to stop projects?

Yes. The increase has been big enough to destroy the economics of schemes that were only moderately profitable when they received permission.

Evidence presented to City Hall put residential build-cost growth at around 28% between 2022 and 2024, with commercial construction costs up around 24%.

A 28% increase is enormous in development terms. If a scheme had expected £200 million of construction expenditure, applying that increase mechanically would add £56 million. Real projects do not reprice quite that neatly, but it shows the order of magnitude.

London is especially exposed because many developments were already expensive to build. High-rise residential projects need lifts, complex façades, fire systems and substantial mechanical infrastructure. Brownfield sites can add demolition, remediation and awkward logistics. Affordable-housing obligations and infrastructure contributions sit on top.

Developers could absorb some inflation if selling prices were rising strongly. Across large parts of London, they were not.

The fact that City Hall is now offering temporary Community Infrastructure Levy relief and extra viability support gives a fair idea of how serious the cost problem has become.

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Are weak London home sales making developers delay construction?

Yes. Weak sales are now one of the clearest reasons private London projects are starting later or being built more slowly.

A private developer normally needs to sell homes at a certain pace and price to fund the next phase and meet lender requirements. If mortgage affordability weakens, that pace falls.

Molior recorded 33,782 private residential starts in London in 2015. In 2025 it counted only 5,547. That is an 84% decline.

The first three quarters of 2025 were particularly weak, with only 3,248 private-sale and rental starts according to figures later cited by the House of Commons Library. Q4 improved, but from an extremely low base.

This is where the idea that developers “hold back supply” contains a piece of truth. A company building 1,000 apartments will rarely release all 1,000 at once if doing so forces steep discounts. It will phase construction around the rate at which buyers or investors can absorb the homes.

That behaviour slows housing delivery, but it also reflects the limits of a system that depends heavily on selling expensive homes into the private market.

Private London development 2015 2025 Change
Molior recorded starts 33,782 5,547 -84%
Average monthly equivalent 2,815 462 -84%
Q3 2025 starts alone — 986 Extremely weak
Q4 2025 starts — 2,294 Better, but from a very low base

Why don’t London developers just cut prices and build anyway?

Because at some point the project stops making money altogether. Selling homes cheaply can clear stock, but it cannot rescue a scheme if expected revenue falls below the cost of land, construction, finance, taxes and planning obligations.

London’s housing shortage makes this confusing. Huge numbers of people need cheaper homes, yet developers can still decide that building more homes is commercially unattractive.

The missing piece is purchasing power. Demand supports construction only when buyers can actually obtain mortgages or investors can finance purchases at prices high enough to cover development costs.

Land prices also adjust slowly. A site may have been bought when expected sales values were much stronger. The developer can redesign the project or accept a lower return, but it cannot magically erase the historical land cost.

That is how a city can have expensive homes, desperate housing demand and approved projects that still do not stack up financially.

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Are London affordable-housing requirements making approved projects harder to build?

Sometimes, yes. The bigger problem right now is often finding someone who can actually buy and finance the affordable homes promised in the planning agreement.

Many private schemes agree under Section 106 to provide affordable housing that is then bought by a registered housing provider.

Housing associations have become much more cautious about those purchases. Higher borrowing costs have hit them too, while large amounts of capital are being diverted into fire-safety remediation, damp and mould work, energy upgrades and repairs to their existing homes.

A GLA review of stalled development found that registered providers were increasingly prioritising their existing stock rather than buying new Section 106 units.

That can leave a developer with an awkward problem: the affordable homes are required by the permission, but there is no housing association willing to buy them on workable terms. Without that sale, lenders may refuse to fund the rest of the scheme.

Homes England’s decision to extend its Section 106 Affordable Housing Clearing Service to London is a good indication that this is now a real market blockage rather than an isolated complaint.

The answer is not simply to remove affordable housing. London needs affordable-housing obligations and a financing system capable of actually delivering them.

Is the Building Safety Regulator still holding up London high-rises?

Yes, but much less than during the worst of the Gateway 2 backlog. Building-safety approvals still matter for London, although they no longer explain the full collapse in starts.

For higher-risk residential buildings, planning permission does not allow a developer to move straight into the relevant construction work. Detailed building-control approval is needed through Gateway 2.

Earlier in the new regime, developers faced very long and unpredictable waits. Government data on older London cases later showed a median approval time of about 44 weeks. That was a serious problem in a city where high-rise housing accounts for a large share of new supply.

The recent direction is better. The Building Safety Regulator reported an overall Gateway 2 approval rate of 84% across a recent 12-week period, with more than 18,000 residential units clearing the gateway nationally. Much of the historic legacy caseload has also been worked down.

London therefore still has projects waiting on building-safety approvals, but Gateway 2 has shifted from an escalating crisis to a constraint that is gradually becoming more manageable.

Gateway 2 indicator Earlier position More recent position Direction
London live applications More than 800 at points Falling as legacy cases clear Improving
London legacy approval median About 44 weeks Legacy cohort largely processed Improving
Overall approval rate Much weaker during early backlog 84% in a recent 12-week period Strong improvement
Residential units clearing nationally Previously heavily constrained 18,000+ in that period Accelerating

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Do London’s giant regeneration projects make the backlog look worse than it really is?

Yes. Huge phased schemes inflate the number of approved-but-uncompleted homes because thousands can receive consent years before anyone expects the final phases to be built.

London depends heavily on this kind of development. Former industrial sites, estates, railway land and town centres are often rebuilt through programmes containing several thousand homes rather than one small project.

Old Oak shows the scale. Current plans envisage roughly 8,000 homes alongside major commercial development and infrastructure. Around 93% of the land required is in public ownership by area, yet delivery still depends on agreements involving bodies such as the Department for Transport and Network Rail.

A project like that cannot sensibly build all its homes at once. Infrastructure has to arrive in sequence, contractors need manageable workloads and the local sales or rental market can absorb only so many units each year.

So a home sitting in year eight of a ten-year masterplan should not be treated in the same way as a vacant site where construction could have started immediately.

This is one reason the raw “approved but unbuilt” figure is always larger than the number of homes London could realistically unlock in the next year or two.

Does land banking still slow London housebuilding?

Yes, but it is more accurate to see land banking as one part of a wider delivery problem than as the main cause.

Developers keep land pipelines because planning is slow and uncertain. A housebuilder that finishes one site needs another consented site ready to go, so holding future land is part of normal operations.

Where the criticism becomes stronger is around the pace of release. If a developer controls a very large site, it may prefer to sell 200 homes a year at strong prices rather than 800 at heavy discounts. That clearly limits how fast the private market builds.

The CMA recognised this weakness in the speculative housebuilding model. But after examining major housebuilders’ sites and internal evidence, it still gave greater weight to planning constraints and the economics of private development than to a simple theory of widespread intentional withholding.

London’s recent collapse in starts strengthens that reading because councils, housing associations and institutional rental investors have also slowed sharply.

Land banking matters. It just does not explain most of what is going wrong now.

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Why do London councils approve housing schemes that later become unviable?

Because a planning decision freezes the design and obligations, while the market around the project keeps moving.

A council can assess viability using the best information available at the time. It cannot lock in the future interest rate, contractor price, mortgage market or appetite of housing associations.

Planning can itself take long enough for those assumptions to go stale. A scheme designed when debt was cheap may reach the construction stage after borrowing costs have doubled. A contractor quote can expire. A build-to-rent investor can pull out. New fire-safety requirements can force a redesign.

That explains why speeding up planning decisions helps but cannot solve London’s delivery problem on its own.

An approval only turns into a home when the scheme still works financially by the time construction begins.

Why are London housing completions still holding up if construction has become so weak?

Because completions tell us what London started several years ago. Starts tell us much more about what will be completed next.

The Planning London Datahub recorded 48,962 residential starts in 2022/23, then 27,386 in 2023/24 and 21,665 in 2024/25. Yet 31,770 homes were completed in 2024/25.

That means completions exceeded starts by more than 10,000 homes in that year. London could do that because developers were finishing projects that entered construction during stronger years.

The ONS separately recorded 32,678 net additional dwellings in London during 2024/25, broadly consistent with the GLA completion picture. For comparison, net additions were 45,676 in 2019/20.

For now, the cranes and completions can make the slowdown look less dramatic than it really is. The risk appears later, when the thin pipeline of current starts reaches the completion stage.

London housing flow 2022/23 2023/24 2024/25
PLD residential starts 48,962 27,386 21,665
PLD completions — — 31,770
ONS net additions — — 32,678
Starts minus completions in 2024/25 — — About -10,100

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Are London councils and housing associations struggling to build too?

Yes. The weakness in London housebuilding now extends well beyond private developers.

London boroughs supported by GLA programmes started more than 10,000 council homes at the 2022/23 peak. Starts later fell sharply as financing and construction conditions deteriorated.

The wider Affordable Homes Programme 2021-26 also missed its revised London target. The Mayor recorded 14,335 starts by the original programme deadline, below the revised range of 17,800 to 19,000.

At the same time, the previous 2016-23 Affordable Homes Programme still had 32,081 started homes awaiting completion by March 2026. Many of those developments were progressing normally, but the figure shows how long affordable housing can remain in the pipeline after a formal start.

Housing associations face a particularly difficult trade-off these days. Money for new development competes directly with spending on existing homes, including fire-safety works, repairs and energy-efficiency upgrades.

The simultaneous slowdown across private, council and housing-association development is one of the strongest reasons to treat London’s current problem as a system-wide viability squeeze.

Will London’s latest rescue measures actually get stalled homes built?

Some of them, yes. The latest package tackles several real bottlenecks, but it is still too small to repair London’s whole housing pipeline on its own.

City Hall now has a £324 million Developer Investment Fund aimed specifically at stalled schemes, with an initial target of at least 5,000 homes. Another £1.5 billion of low-interest lending is intended to support social and affordable housing, while London can draw on the much larger national Social and Affordable Homes Programme.

The government and City Hall have also introduced temporary Community Infrastructure Levy relief for qualifying projects, a faster planning route for some schemes delivering at least 20% affordable housing, stronger mayoral intervention powers and new attempts to unblock difficult sites through the New Homes Accelerator.

Beam Park provides one concrete example of what targeted intervention can achieve. Government says the process helped release around 1,500 homes that had been trapped behind the railway-related planning condition.

Some old permissions will also need redesign rather than subsidy. A scheme conceived for a completely different interest-rate and cost environment may have to change its unit mix, tenure, density or affordable-housing structure before anyone can finance it. Faster replanning is part of the rescue job too.

The measures are useful because they attack specific problems rather than assuming every stalled scheme has the same cause. Their limitation is scale. Unlocking 5,000 homes through one fund is meaningful, but London needs tens of thousands more homes every year.

Intervention Main blockage targeted Scale or condition Likely effect
City Hall Developer Investment Fund Stalled and unviable sites £324m; initial target of 5,000 homes Closes financing gaps
Low-interest housing loans Expensive borrowing £1.5bn Reduces financing costs
Temporary CIL relief High development costs Eligible qualifying schemes Improves viability
Faster planning route Schemes needing a reset At least 20% affordable housing Speeds revised permissions
Gateway 2 reforms High-rise building control Approval throughput rising Shortens regulatory delays
New Homes Accelerator Site-specific blockages Case by case Can unlock large schemes

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What would actually get more approved London homes built?

London needs to make far more approved schemes financeable and construction-ready, while also rebuilding the pipeline of new permissions.

That starts with faster planning, but the bigger gains now sit after the planning committee vote. Conditions need to be discharged faster. Section 106 affordable homes need willing buyers. The Building Safety Regulator needs to keep reducing delays. Major regeneration sites need infrastructure money before later phases can move.

Affordable housing also needs enough grant and cheap financing for councils and housing associations to keep building during weak private markets. Otherwise London becomes even more dependent on buyers being able to afford expensive market-sale flats.

That dependence is a fundamental weakness. When mortgage affordability falls, private starts collapse. Council housing, housing-association development and institutionally funded rental housing can keep more construction moving through those downturns.

London also needs new land values to adjust to the economics developers actually face. Sites priced on old assumptions about interest rates, sales prices and construction costs can stay frozen for years.

Planning reform can unlock capacity. Money, infrastructure and buyers are what turn that capacity into homes.

So why are so many London homes approved but not built?

Because London has accumulated far more planning permissions than its current development system can turn into construction. Developer phasing plays a role, but today’s biggest problems are weak project economics, expensive finance, higher building costs, affordable-housing funding gaps, infrastructure dependencies and the long process between consent and a genuine construction start.

The numbers show how much the situation has deteriorated. Planning approvals fell from 98,299 self-contained homes in 2014/15 to 32,655 in 2023/24. Residential starts then dropped from 48,962 in 2022/23 to 21,665 in 2024/25. In the narrower private market, Molior recorded 33,782 starts in 2015 and only 5,547 in 2025.

We should be careful with the raw backlog because some consented homes belong to long phased schemes and were never expected to appear quickly. But that qualification cannot explain a collapse of this size.

Construction costs rose sharply. Borrowing became much more expensive. Housing associations pulled back from buying some Section 106 homes. Gateway 2 created serious delays for high-rise projects before starting to improve. Individual infrastructure problems have frozen thousands of homes on sites such as Beam Park.

The idea that developers simply collect permissions and refuse to build profitable homes is too neat. Some developers do manage supply carefully and large sites are often phased to protect prices, but the recent evidence points to something broader: many London permissions no longer lead smoothly to a financeable project.

Our judgment is clear. London genuinely has too many homes stuck between approval and completion, but the main failure today happens after permission is granted. Planning reform can increase the number of schemes entering the system; London will still fall short unless those schemes can also secure finance, affordable-housing buyers, infrastructure and a viable route into construction.

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OUR METHODOLOGY

This analysis tests why so many London homes can receive planning permission without subsequently reaching construction or completion. We separate the problem into the stages that can block delivery after consent: the planning pipeline, construction starts, private-market demand, project economics, affordable-housing delivery, infrastructure dependencies and building-control approval.

We do not treat the headline stock of approved-but-uncompleted homes as if every unit could be built immediately. Large regeneration schemes can contain years of planned future phases, while other permissions may already be under construction. We therefore distinguish between normal phasing and homes that appear genuinely stalled.

The Planning London Datahub is our main reference for London-wide approvals, starts and completions. Molior is used more selectively for the narrower private-sale and build-to-rent development market. The two datasets measure different parts of the market, so their totals are not treated as interchangeable.

We also distinguish between stock and flow. The backlog of consented homes shows how much housing sits somewhere between permission and completion, but new starts are more useful for judging what is successfully moving into construction under current financial and regulatory conditions. Completions, by contrast, often reflect schemes financed and started several years earlier.

To test whether deliberate developer withholding is the main explanation, we compare private-sector evidence with what is happening among councils, housing associations and institutional rental investors. We also use the Competition and Markets Authority’s housebuilding market study, which examined more than 5,800 sites controlled by the 11 largest housebuilders and assessed the role of land pipelines and build-out rates.

For project viability, we use evidence on financing costs, construction-cost inflation, affordable-housing delivery and public interventions aimed at stalled schemes. Greater London Authority evidence on regeneration viability and rising build costs is used alongside the City Hall Developer Investment Fund and the £1.5 billion low-interest housing finance package to judge whether the viability problem is large enough to require direct intervention.

Infrastructure and regulatory constraints are treated separately from financial viability. Beam Park is used as a case study of a planning and infrastructure condition holding back later phases, while Building Safety Regulator Gateway 2 data are used to assess both the earlier approval backlog and the more recent improvement in approval throughput.

Affordable-housing delivery is assessed using GLA programme data and Homes England’s Section 106 Affordable Housing Clearing Service. The clearing service is particularly useful because it shows that difficulties finding registered providers for Section 106 homes became widespread enough to require a dedicated mechanism in London.

We use the Office for National Statistics net-additions series as a separate cross-check on the GLA completion picture. The purpose is not to force two different datasets to match exactly, but to check whether they tell a broadly consistent story about how many homes are still reaching completion while starts weaken.

Key sources used for this analysis include the Greater London Authority Planning London Datahub, the GLA residential approvals dashboard, residential starts dashboard and residential completions dashboard, Molior’s Residential Development in London report, the House of Commons Library briefing on government support for housebuilding in London, the Competition and Markets Authority housebuilding market study, the GLA’s Unlocking Development evidence, Homes England’s Section 106 Affordable Housing Clearing Service, Building Safety Regulator Gateway 2 data, the government’s Beam Park and London housebuilding intervention, the GLA’s Old Oak Public Land Agreement, the London Assembly Affordable Housing Monitor 2026, City Hall’s Developer Investment Fund, and the Office for National Statistics net additions to the housing stock series.

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