Despite progress on reforming the planning system, the residential sector currently faces significant hurdles to increasing delivery. London is particularly hard hit, with starts on private housing falling by half over the past twelve months. Meanwhile completions have fallen 30% since 2020, to c.32,000 in 2024, a little over a third of the Government’s estimate of need. Affordable housing has been particularly affected, with just 876 homes completed between April and June 2025. Weak market conditions are a key factor, with fewer than 4,000 new homes sold in London during H1 2025, according to figures from Molior, with sales rates falling to 2009 levels.

Outside London, the picture is more optimistic. Starts were up by over 50% in the twelve months to June 2025 compared to a year earlier, driven by large housebuilders delivering for private sale. Regional alternative starts grew by only 27% over the same period. Planning remains a barrier across the country. 80% of Home Builders Federation members cited it as a ‘major constraint’ in the latest survey, ahead of cost, labour, and land availability.

Given the challenges facing residential development as a whole, is investment activity in the living sector being redirected from building new homes to the refurbishment of existing stock?

In 2024, 45% of investment in multifamily Build to Rent was into operational stock, compared to just 17% two years earlier. Investors are repositioning older assets to enhance rental income and tenant experience. Common strategies include rebranding, professional management, upgraded unit specs, improved shared amenities, ESG enhancements, and increased site density. Student accommodation is also seeing increased refurbishment activity, with Unite’s £32 million programme being most notable, alongside additional schemes from iQ, Grosvenor, and PGIM.

In turn, registered providers (RPs) are also directing funds into upgrading and remediating existing stock, limiting their ability to invest in new homes. As such, trading of existing stock to rebuild capacity and rationalise portfolios has become essential.

With inflationary pressures and regulatory hurdles continuing to impact viability, refurbishment can offer a more predictable route. It may also face an easier time passing through the Building Safety Regulator (BSR) Gateway 2 approval process.

The last data published by the BSR in July this year suggests that new build applications took an average of 21 weeks for any outcome, with successful cases averaging 36 weeks. In contrast, existing building refurbishments (category A and B works) ranged from 13 weeks to 18 weeks, with successful outcomes averaging around 25 weeks. Notably, category A and B refurbishment applications appear to have a higher success rate, averaging 32% versus 17% for new builds. However, as refurbishment scopes can vary significantly, from internal fire safety upgrades to larger structural interventions, it is difficult to draw firm conclusions.

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