In this week's blog, we take a closer look at London's housing situation as reported via the online industry platform "Building", which has astutely picked up on the fact that London is facing a critical slowdown in new housing development, with new home starts plunging to a 16-year low. As highlighted in a recent report by residential development consultant Molior, just 1,210 new homes began construction in the first quarter of this year across only 10 of the capital's 33 boroughs. In our sector or any financial technology play, the focus is often on 'unlocking' something, 'unlocking the housing backlog', as if to suggest that all our problems are tightly wedged against a giant oak door and just finding that one key will release a pent-up superhighway of development. Still, in practicality, it's less about unlocking and more about enabling. The solution is more players in the game.
At the current rate, London is on track to deliver a mere 5.5% of the government’s annual target of 88,000 new homes. A key contributor to this collapse is the delay in regulatory approval under the Building Safety Regulator's (BSR) new gateway process—particularly Gateway 2, which must be passed before construction can begin on high-rise projects. There is the problem: to unlock that issue, you would have to reverse out of much-needed safety reform. The way to counteract that issue is to have more players in the game. Amid these regulatory bottlenecks, fintech-supported lending emerges as a powerful tool to inject agility, diversity, and resilience into the residential development landscape.
To address this gridlock, the market needs not only regulatory reform but also structural change. One promising pathway is to increase the number and diversity of developers entering the field—especially smaller and more nimble ones who can navigate around bottlenecks and take on medium-density or low-rise projects that may not require Gateway 2 approvals. Fintech lending platforms connect individual investors directly with borrowers—in this case, residential developers—bypassing traditional financial institutions. This model can support the rise of a new generation of small and mid-sized builders who are currently locked out of mainstream financing due to tight credit markets or insufficient scale.
These players need to come into the market to solve the housing issue.
We know from experience that traditional banks still hesitate to fund small residential projects due to perceived risk, limited borrower track records, and regulatory capital requirements. Our sector fills this gap by enabling developers to raise smaller tranches of capital more flexibly, lowering the barrier to entry and allowing more small and mid-sized builders to take on projects, especially low-rise or mid-rise schemes that are not subject to the BSR’s Gateway 2 requirements. The emergence of more small-scale developers will counterbalance the slowdown among large firms, thereby increasing housing output even if large high-rise projects remain stuck.
With fewer large developers monopolising capital and land, builders funded by our sector can take on smaller, distributed projects across the city, including in boroughs currently seeing zero new housing starts. Diversification in both geography and project type enhances market resilience, allowing areas less affected by regulatory delays to progress with new developments. This is crucial, as the article in "Building" notes that 23 of London’s 33 boroughs had no new housing starts in the first quarter. By empowering local developers to act, this sort of lending can jump-start construction in these dormant zones.
London’s housing development crisis is driven not just by regulatory delay but also by structural weaknesses in the industry's financing and organisation. Gateway 2 and Gateway 3 bottlenecks have highlighted the vulnerability of a system dominated by a few large developers and reliant on top-down capital flows. Our sector's lending offers a bottom-up solution—one that empowers small builders, diversifies risk, and injects fresh momentum into the market. By increasing the number of builders in the market, or players in the game, and distributing capital more democratically, our sector can act as a crucial lever in reigniting home construction in the capital. While regulatory reform at the BSR level is essential, parallel innovation in finance, led by platforms such as ours, can begin to unlock London’s stifled housing pipeline from the ground up.
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