Actually, if you've been to central London recently, you'll know there is a huge amount of demolition and rebuilding going on: for example dead center on the west side of Tottenham Court Road. Office buildings in the centre, from the 20s onward, regularly get demolished and rebuilt to modern specs. There are brand new "luxury condos" around Tate Modern and the amount of building going on near Canary Wharf is incredible.
It's true that there are some preserved buildings that are unlikely to be redeveloped. But in the City proper (the square mile) there is a lot of redevelopment. Nobody lives there, though.
The reason for the basements is not that the houses are architecturally noteworthy, just that they are in conservation areas. It has to do with the look of the neighbourhood and all the property value that goes along with that. It's not an effective way of densifying the housing stock.
According to Wikipedia: "The City has a resident population of 9,401 (ONS estimate, mid-2016) but over 300,000 people commute to and work there."
That is the breakdown I was trying to communicate.
No, there are very stric planning rules in London. It’s not just about not touching listed properties (though a lot of the city is listed) but also there is a web of line of sights from different view points which are protected and results in an invisible ceiling to new constructions. Add to that a very lengthy planning process and locals hostile to the densification of the area despite the crumbling transportation system, and you get the current odd situation where most of the city is made of low rise, 2 floors high tiny houses converted into even tinier apartments, and a few spots where you have a massive concentration of some of the highest residential skyscrapers in Europe.
It's true that there are some preserved buildings that are unlikely to be redeveloped. But in the City proper (the square mile) there is a lot of redevelopment. Nobody lives there, though.
The reason for the basements is not that the houses are architecturally noteworthy, just that they are in conservation areas. It has to do with the look of the neighbourhood and all the property value that goes along with that. It's not an effective way of densifying the housing stock.