London faces losing more than 42,000 new homes from its development pipeline as planned residential projects are being eroded by viability challenges, according to a report from Savills.
In its latest analysis, Savills reported that a number of London sites with residential consents or clear residential potential were being repurposed or were being retained in their existing form, because non‑residential uses offered stronger, more certain returns than housing.
Savills identified a minimum of 77 sites, totalling nearly 30,000 homes, which were now unlikely to go ahead, despite winning planning consent. Around 14% of these will be redeveloped for alternative uses, with the majority of landowners now intending to retain the existing use for the foreseeable future.
It also identified another 25 sites at pre-planning stages, allocated for development in adopted local plans, which are no longer expected to come forward, equating to an additional 12,000 homes.
Savills added there was also anecdotal evidence to suggest the loss could exceed 50,000 homes. Of the 42,000-home loss, some 12,000 equated to affordable housing units. These decisions have been made in the last 12 months.
The analysis cited numerous examples, including the Honey Monster site in Southall, acquired by CyrusOne, which is set to be turned into a data centre, despite an earlier permission to deliver nearly 2,000 homes.
It also cited the Highway Trading Centre site in Wapping, which had consent for 264 homes, but was acquired by SEGRO after residential developers were unable to match the industrial-led bid, and John Lewis’s decision to move away from build to rent after a “fundamental shift in the economic conditions”.
The analysis, carried out by Katy Warrick, head of the London residential research team at Savills, said: “This shift has been building for a couple of years, but the committed decisions and withdrawal from delivery of new-build homes has been exacerbated in the last 18 months.
“There are numerous retail parks and employment sites where residential consents have lapsed, have been withdrawn or are being deliberately left unimplemented, not because housing is undeliverable but simply because it is no longer financially viable.
“In a market where policy and politics seek higher levels of residential delivery, residential is no longer the default highest‑value use. […] The sites that succeed going forward will be those where use and value are looked at holistically, and project success and policy are aligned from day one.”
Savills also revealed residential starts in Q1 2026 saw a 77% drop on 2018-19 levels, with new applications down 54% during the same period.
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