Taylor Wimpey has become the latest housebuilder to back away from developing new homes in the capital as the economic case has ‘evaporated’.
In the latest blow to Sir Sadiq Khan’s housing targets, the Taylor Wimpey boss said she had no intention of building more homes in London once the handful of projects already underway were completed.
To meet its housing targets, the government requires 88,000 houses a year to be built in London, or 22,000 every quarter.
Housebuilders have already warned the Mayor that London has become a ‘no-go zone’ for investment as unrealistic affordable housing targets were ‘strangling’ efforts to build new homes.
Jennie Daly, who has run the FTSE 250 housing firm since 2022, told The Times: ‘Baseline viability is, I think, fundamentally broken in London. The reward for undertaking what is a very high-risk form of development in London has just evaporated.’
She pointed to affordability issues, with higher mortgage rates compounding the pain of much higher property prices in the capital. Stamp duty costs and a lack of foreign investment have also weighed on sales.
The collapse in buyer demand and rising construction costs have contributed to housebuilder woes. Last month, Vistry announced plans to exit its open market operations in the south-east as it grapples with sluggish sales.
Daly also flagged higher costs for developers and pointed to a rule requiring every high-rise block of flats over 18m to have a second staircase.
The government requires 88,000 houses a year to be built in London
The Home Builders Federation last month warned Sir Sadiq’s development strategy had ‘effectively made London a no-go zone for housing investment’.
He requires housebuilders to make sure 35 per cent of homes within each development are affordable, which developers say is too high.
This week, Berekely Group hit out at the government after losing its battle to construct hundreds of homes in Peckham’s derelict Aylesham Centre.
Chief executive Rob Perrins warned the decision underscored the ‘gulf between positive planning policies and what actually happens when you try to build homes in London’.
Developers across the UK have faced rising build costs, additional taxes and extra red tape within the sector.
Data from residential development consultancy Molior showed that construction began on 2,876 homes in the second quarter of 2026.
Daly also criticised late-stage viability reviews, where the Greater London Authority, towards the end of a project, examines whether it has been more profitable than the developer forecast.
She added: ‘If it proves that I have made a good bet, effectively, and invested well and my scheme is profitable, I’d have to increase the level of [affordable housing] contribution. I think for many, that has just proven too ambitious.’
A spokeswoman for the mayor of London told The Times he was ‘doing everything he can to deliver more homes’ and that he ‘recognises the challenges facing housebuilders’.
Andy Burnham hopes to revive the housing market by helping first-time buyers onto the ladder with a deposit of 2.5 per cent. It will provide eligible first-time buyers with a loan worth 20 per cent of their new-build property’s value to help pay for the purchase.
That helped to lift housebuilders’ shares but it has been met with scepticism from economists about the boost to housing demand coming at a time when interest rates are about to go up – which would have the opposite effect.
DIY INVESTING PLATFORMS
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.