London Building Brief: The Levy Lands, the Cranes Don’t

London’s residential builders started October with a new tax and a regulator that still can’t keep pace. The Building Safety Levy went live on 1 October. Meanwhile, finished flats sit empty waiting for sign-off, and housing starts in the capital are near record lows.

If you build, price or fund homes in London, this is the story that matters this autumn. Here’s the short version.

1. The levy is live

The Building Safety Levy now applies to building control applications for new homes in England submitted on or after 1 October 2026. Applications lodged before that date are not caught.

The government’s target is about £3.4bn over roughly ten years, to pay for fixing unsafe buildings after Grenfell. It covers all new dwellings, not just high-rise, subject to exemptions, and previously developed land gets a discounted rate.

The trap: there is no transitional relief. If an existing approval is rejected or lapses and a fresh application goes in now, the levy applies. Lawyers expected a rush to file before the deadline, and some schemes that aimed to beat it may have slipped past it.

Watch for: in the coming weeks, developers will find out which projects missed the cut-off and how the extra cost lands on viability.

2. Gateway 2 is better. Gateway 3 is the new jam.

For higher-risk buildings (18m+ or seven storeys), the Building Safety Regulator has been the main bottleneck since 2023. London has felt it most: a House of Lords committee heard that high-rise starts in the capital fell sharply after the regulator was set up.

There is progress at the front end. Gateway 2, the design sign-off before work starts, was down to roughly 13 weeks by February 2026, close to the 12-week target. Approval rates have risen to about 71%.

The problem has moved to the finish line. At Gateway 3, the completion sign-off, one snapshot showed 44 schemes still undecided after more than three months. The worst case, believed to be in south-west London, took 550 days. That means thousands of completed flats are sitting empty and developers are carrying finance costs on buildings they can’t occupy.

The regulator is also being restructured. It is moving out of the HSE into a new executive agency, and the government plans a single construction regulator by 2028.

3. The numbers: London housebuilding has stalled

Only 4,522 social and affordable homes started on site in London in 2024/25. In 2022/23 the figure was 26,386, so starts fell by more than 80%. London’s housing need target is about 88,000 homes a year.

The causes are well known: Building Safety Regulator delays, the new second-staircase rules, high interest rates, and overseas buyers who no longer fund schemes through off-plan pre-sales.

In March 2026 the government and the Mayor brought in a temporary emergency package:

Lower affordable threshold. Schemes with at least 20% affordable housing get a fast-track planning route, down from 35%. At least 60% of the affordable homes must be social rent.
CIL relief. Qualifying schemes get 50% off Borough CIL, with more relief for schemes that provide a higher share of affordable homes.
Time limits. The route runs until 31 March 2028 or the new London Plan, whichever comes first.

The early verdict is not good. In July the London Assembly’s Housing Monitor reported that targets were still missed even after they were lowered. More than 340,000 London households are on social housing waiting lists.

4. The bright spot: the City is still building

Commercial work is a different picture. Skanska has signed a £282m contract for 55 Old Broad Street, a 23-storey office tower near Liverpool Street. Work starts this month and is due to finish in late 2029.

Further out, One London, the 309.6m tower at 1 Undershaft that would be the City’s tallest, is due to start in 2028. Prime Grade A office space is getting built. Homes are not.

What it means if you’re a contractor

Programme risk has moved to the end of the job. Allow for Gateway 3 time in your programme and cash flow, and get the golden-thread information ready well before handover.
Check the levy position on every resi tender. Find out whether building control was submitted before 1 October, and who carries the risk if an approval lapses.
Expect a lumpy pipeline. The 20% route and CIL relief should bring some stalled sites back, but the deadlines mean a rush of starts before 2028, then uncertainty.
Commercial is steadier. City office and refurbishment work is still coming to market.