With Gateway Two delaying the construction of so many developments across the UK, Michael Sacks, founder of Sacks Properties, explains why understanding this regulation is crucial for informed investment decisions and capitalising on opportunities.
Right now, the UK property market remains a smart choice for strategic investors. Rental demand is strong, and yields continue to outperform many other established global markets. According to the Savills 2025 Spring/Summer report, prime residential rental values have risen by an average of 6.2% over the past year, with cities like Manchester, Birmingham, and Leeds performing particularly well.
However, the landscape is shifting, and regulation is tightening. One challenge catching many investors off guard is Gateway Two (GW2), a planning checkpoint that’s quietly slowing down the delivery of new properties to the market. This is more than just a minor delay – the Savills report highlights a 30% year-on-year drop in new housing starts, directly tied to GW2-related hold-ups. For investors, that means development timelines are slipping, the housing shortage continues and rental prices and property values are likely to keep increasing.
What is Gateway Two and why does it matter?
Gateway Two is a regulatory checkpoint introduced under the Building Safety Act, a direct response to the Grenfell Tower tragedy. It stipulates that before construction on high-rise buildings can commence, developers must secure approval from the newly established Building Safety Regulator (BSR).
While the emphasis on safety is unquestionably essential, Gateway Two has emerged as a major consideration for developers. The approval process is causing substantial project delays, tying up capital and increasing risk exposure. According to a report by Trowers & Hamlins, through a Freedom of Information request, 92 new-build projects and 641 works projects to existing high-risk buildings (HRBs) are currently on hold pending GW2 approval.
For investors, this means projects that were expected to deliver returns on a defined timeline are now facing prolonged uncertainty, complicating portfolio management and cash flow expectations.
The broader impact on the market
Build-to-rent (BTR) schemes are among the most vulnerable to Gateway Two delays. These projects depend heavily on predictable delivery schedules to hit operational and financial targets. Institutional and overseas investors, who often seek stable, long-term income streams, face disruption in cash flow forecasts when BTR developments stall.
This regulatory uncertainty has prompted large institutional funds to reassess their risk models. Some are reducing capital allocation to UK projects or redirecting investments toward markets with more predictable regulatory environments.
Moreover, delays are putting strain on overseas joint ventures and capital partnerships. International investors less familiar with the UK’s shifting regulatory landscape experience added governance complexities and slower decision-making, further dampening cross-border investor confidence.
Undermining housing targets and investor confidence
Gateway Two’s bottlenecks are directly contributing to the UK falling short of critical housing delivery targets of 1.5 million homes by 2029, particularly in high-demand urban centres where institutional and foreign capital typically focuses.
The unpredictable nature of the approval process undermines investor confidence. It becomes harder to model returns accurately, allocate capital efficiently, and forecast when projects will come to market. For overseas and strategic investors, this increases perceived risk, potentially triggering capital flight or reallocation to more stable, well-understood markets.
In the long run, these challenges risk damaging the UK’s reputation as a reliable, well-regulated destination for long-term property investment, exactly the opposite of what the sector needs to succeed.
Advice for investors navigating the current landscape
Given the current landscape, investors need to adapt their strategies to effectively navigate the challenges posed by the GW2 delays. This involves carefully incorporating regulatory timelines into financial models, building in realistic contingencies to account for potential delays in project delivery, funding rounds, and the timing of returns.
Partnering with experienced investors and developers who have a proven track record with the Building Safety Act and GW2 processes is crucial, as their expertise and established relationships can help streamline compliance and reduce unexpected setbacks.
Savvy investors should focus on resilient locations, areas with strong rental demand, supply constraints, and positive long-term demographic trends that provide more stability and protect value even when development timelines are extended. By combining regulatory foresight with strategic market selection and trusted partnerships, investors will be better positioned to manage risks and capitalise on opportunities in this evolving environment.
What needs to change
For the UK property market to regain momentum, GW2 must be reformed. The process needs to be streamlined and properly resourced to uphold safety standards without causing endless delays that stall projects. Developers and investors require clearer, more consistent timelines and transparent guidance from the Building Safety Regulator to plan with confidence.
Most importantly, stronger collaboration between the public and private sectors is essential. Regulators, developers, and institutional funders must align their expectations and delivery goals to unlock stalled capital and drive forward the country’s housing ambitions.
Without these vital changes, the UK risks losing the strategic investment it critically needs to breathe new life into its housing market and meet growing demand.
