The share of new homes sold off-plan has fallen to its lowest level since 2013, increasing pressure on housebuilder margins and significantly raising development finance costs across the sector.
New research from Hamptons found that just 33% of new homes in England and Wales were sold before construction completed in 2025, down from 36% in 2024 and substantially below the 49% peak recorded in 2016.
The decline in off-plan activity has become a growing issue for developers and lenders alike, with slower sales rates forcing housebuilders to hold expensive development finance facilities for longer periods.
Hamptons estimates that fewer off-plan sales combined with higher interest rates added £264.5m in extra financing costs for housebuilders in 2025 compared with a decade ago.
EARLY-STAGE SALES
The estate agency group says this equated to an additional £3,125 per home sold last year, up from £2,934 in 2024, with around half of the increase directly attributable to higher interest rates.
The figures underline the mounting importance of early-stage sales in helping developers reduce exposure to costly development finance and maintain scheme profitability.
Southern regions have seen the sharpest deterioration in off-plan activity over the last decade, with London, the South West and the South East all recording falls of around 20 percentage points or more since 2016.
Hamptons says the introduction of the second home stamp duty surcharge in 2016, alongside its increase from 3% to 5% at the end of 2024, had significantly weakened buy-to-let investor demand, particularly in southern markets where investors have historically dominated off-plan purchases.
The data highlights a major shift in the type of homes being delivered.
Flats, which are traditionally more likely to secure off-plan buyers, accounted for just 22% of all new homes sold in 2025, down from 38% in 2016 and 54% in 2007 as developers increasingly favour lower-density housing schemes.
Despite the broader slowdown, some regional apartment markets continue to attract strong investor demand.
Hamptons found that 69% of flats in the North West were sold off-plan in 2025, the highest proportion of any region, ahead of London at 65%.
At a local authority level, Oldham recorded the highest share of off-plan flat sales at 94%, followed by Wolverhampton at 86% and Salford at 81%.
By contrast, off-plan house sales remain considerably lower, with just 21% of detached homes and 29% of semis sold before completion last year.
The report also points to the end of the Help to Buy Equity Loan scheme in 2023 as a further factor slowing sales rates, with developers no longer benefiting from a wave of Help to Buy-supported purchases around completion.
LOSS OF BUY-TO-LET
David Fell, Lead Analyst at Hamptons, says: “The share of new homes sold off-plan continued to slide last year. Over the past decade, the share of new homes sold before construction is complete has fallen by around a third.
“This partly reflects the loss of buy-to-let investors from the market, who have traditionally been the largest buyers of off-plan homes.
“However, the shift away from building flats towards houses, which are more likely to be sold after they’re finished and ready to move into, has increasingly contributed to the downward trend.”
HOUSING DELIVERY
He adds: “This move towards lower-density, house-led development is likely to make it harder for the government to significantly ramp up housing delivery.
“Housebuilders are increasingly focused on protecting margins, which has favoured faster-selling suburban schemes. By contrast, profits on slower-selling, high-density sites have been eroded, or in some cases, wiped out entirely by rising finance costs.
“In a higher inflation, higher interest rate world, off-plan sales have rarely been more valuable. The cash they generate allows housebuilders to pay down expensive development finance earlier and help offset the substantial upfront costs of materials and labour.
“Many of the materials needed to build new homes are highly energy-intensive, meaning their costs have risen far faster than wider inflation.”
