Development viability across the UK is in crisis. A combination of significant delays at the Building Safety Regulator, market headwinds including interest rates and construction cost inflation, and uncertainty generated by several tax and regulatory changes has brought development to a near standstill.
Latest analysis from the British Property Federation and Savills shows the severity of the viability crisis on the delivery pipeline of new rental homes.
The number of units under construction fell by 13% on the year, with the sharpest drop (29%) seen in London, while the number of units in planning grew by only 2%, compared with 14% in 2022. The total number of completed units has now surpassed 139,132 units, a growth of 14% in completed stock over the past 12 months. This was driven by particularly strong completions between Q1 and Q2 2025.
The trend of completions exceeding starts, which started at the beginning of 2024, continued in Q3 2025. This is illustrated by the below heatmaps, showing construction starts in 2022 compared to 2025 to date. Only c. 6,000 have started construction this year, compared to c. 26,000 in 2022 – a pro rata drop of 77%.
The British Property Federation recommends the following policies to reduce investment risk and address the viability crisis:
Prioritise tax and regulatory stability Uncertainty adds risk and even the suggestion of new taxes or levies can deter inward investment. To deliver the Government’s ambitions for growth and homes, there must be no new taxes and a stable policy framework.
Speed up the planning and development process Address delays at the Building Safety Regulator – regulators and statutory consultees must meet their statutory deadlines, and expectations and guidance must be simple and clear. New recruitment must prioritise technical expertise in building and fire safety. At the same time an increase in planning resource through the recruitment of 3,000 additional planners must take place to boost capacity in local authority planning teams.
Remove council tax and business rates on empty units for newly developed or refurbished properties Removing council tax and business rates on newly developed or refurbished empty units would reduce upfront costs of a development and significantly support viability. It would also better encourage faster build out rates and higher-density construction, which would help meet housing targets and support the New Towns agenda.
Reintroduce Stamp Duty Land Tax (SDLT) support for high-density housing and consider a carve out from SDLT completely in areas with very low land value, like brownfield land and regeneration sites SDLT Multiple Dwellings Relief (MDR), which was abolished last year, was widely regarded as one of the key policies that supported the growth of the Build-to-Rent sector over the last decade. New and better targeted SDLT support should be reinstated for large scale residential housing transactions.
Melanie Leech, Chief Executive, British Property Federation said: “A combination of high taxes, levies and regulation is undermining the Government’s own ambitions to deliver on growth and meet housing targets. While we appreciate the fiscal pressures the Government is facing, inertia in the face of the ongoing viability crisis will cost the Government dearly by deterring investment and stalling development.
“Steps to streamline the planning process are welcome, along with the recent announcement on affordable housing requirements in London, but without a stable policy environment the country is going to continue to see declining construction activity. We urge the Government to carefully consider the levers it pulls to plug the fiscal hole in the upcoming Budget, as we have seen firsthand the consequence of scrapping multiple dwellings relief on the provision of new rental homes and caution against any ‘quick fixes’ as it will knock already fragile investor confidence.”
