COMMENT The UK property market is facing mounting pressures, including rising costs, tough regulations and tightening finance. High-rise developments in London are slowing and insolvency-driven sales are on the rise. Navigating this climate demands expertise, adaptability and a clear understanding of market realities.
Worryingly, 42% of our fee income last year came from instructions received from receivers and administrators. In just eight weeks, we’ve advised on 33 additional distressed assets, with new work coming in daily. It’s clear that insolvency-led transactions are dominating the landscape. To put it bluntly, the past five years have been a nightmare for developers. And just when you think it can’t get worse, along comes the Building Safety Act.
The Grenfell Tower fire in 2017 was a tragedy that exposed severe flaws in the UK’s building safety standards. It was a wake-up call, leading to a complete overhaul of regulations, culminating in the Building Safety Act 2022. The legislation was designed to prevent future disasters by introducing far stricter oversight on high-risk developments.
Developers now face additional layers of compliance, including requirements for detailed fire safety plans, regular inspections and strict assessments of external wall materials. The ban on combustible materials for buildings over 18m has also expanded to include hotels, hostels and boarding houses. Beyond regulatory complexities, the cost of labour, materials and red tape continues to escalate, creating further obstacles for developers. Labour shortages and material price volatility have significantly impacted construction budgets, while planning delays and regulatory burdens add layers of complexity.
While these measures are well-intended, their implementation has significantly lengthened project timelines and increased costs, adding to the growing list of challenges developers face.
The biggest bottlenecks
The Act introduces a three-stage approval process aimed at enhancing building safety:
- Planning application stage – Subject to tougher scrutiny, ensuring developments meet rigorous safety criteria;
- Pre-construction – No shovel in the ground until full approval is granted;
- Pre-occupation – Final checks before residents move in, strengthening long-term safety measures.
Regulators claim approvals should take 12 weeks for new builds and eight for remediation projects, but the reality is starkly different. Between October 2023 and September 2024, only 14% of 1,018 applications submitted were approved. As of September 2024, only 146 applications were approved, 847 still await decisions and 25 were rejected outright. Combine this bottleneck with planning delays, section 106 issues, rising build costs, borrowing constraints and a weak sales market, and it’s no surprise developers and landowners are struggling, especially if they’re building over 18m.
London’s development landscape has seen a sharp decline in recent years, with construction starts nearly halving in just two years. In 2022, 17,754 units began construction, but by 2024, that number had dropped to just 10,555. A stark reflection of the challenges developers face.
The slowdown isn’t limited to private development; affordable housing is suffering too. G15 reports that affordable housing development has slowed dramatically, with just 4,708 homes started between 2024 and 2025 – a sharp decline from 13,744 two years earlier.
Timing is everything
With rising build costs, stricter planning regulations and weaker sales volumes, many developers are either postponing projects or abandoning them altogether, further exacerbating supply issues. At the same time, the land market has weakened by an estimated 20-25% from its peak, signalling an increasingly cautious investment climate.
For developers navigating this volatile market, adaptability and financial pragmatism are critical. With fewer committed buyers and growing insolvency concerns, there is now a fundamental shift in the way landowners and investors approach their assets. Those who hesitate to adjust pricing or bring sites to market quickly may find themselves with limited options as competition for distressed stock continues to intensify.
When taking an appointment, we need landowners to be realistic. If they’re not already on “planet Earth”, getting them there fast is a priority. With the sheer volume of new work flooding in, there’s no time to waste. Sites should hit the market sooner rather than later because buyer choice will only increase as the year progresses.
Yes, buyers still exist, but far fewer than two years ago, with many facing legacy issues. Ultimately, you have to give people a reason to buy, and right now, that reason is price. The only true test of value is what someone will pay, and the old saying rings truer than ever: First loss is best loss.
Jonathan Vandermolen is the founder of Vandermolen Real Estate
