BLOGS

Why BTR and PBSA are the sharpest test of planning reform

Labour's planning reform agenda — built around a mandatory housing targets, a presumption in favour of sustainable development, and promises to speed up decisions on "grey belt" and brownfield land — was designed with volume housebuilders in mind. But it is large-scale build-to-rent (BTR) and purpose-built student accommodation (PBSA) schemes that are proving the sharpest test of how the new regime actually behaves in practice.

These schemes concentrate hundreds of units on single sites, usually in dense urban locations, often near transport hubs, and frequently in boroughs where local planning committees have historically been cautious about height, density and the loss of family housing to purpose-built rental products. That combination — high unit counts, high visibility, and institutional capital watching closely — makes every called-in decision or contested consent a signal that investors, lenders and developers are reading closely for direction.

For institutional investors underwriting forward-funded BTR deals or lenders assessing development finance risk, planning timelines are not a technicality. They are a direct input into GDV assumptions, absorption schedules and the cost of capital. A regime that speeds up approvals at scale is a tailwind for the asset class; one that adds ministerial intervention or committee unpredictability is a real underwriting risk.

What the pipeline data shows so far

REalyse planning data on large-scale (100+ unit) BTR, co-living and student accommodation schemes across Greater London tells a story of a pipeline that has kept moving, even through a change of government. Granted decisions on qualifying schemes rose from roughly a dozen in 2023 to around 24–27 a year in 2024 and 2025, collectively representing well in excess of 10,000 units annually at the point of decision — a meaningful acceleration in throughput rather than a slowdown.

Refusals and withdrawals, by contrast, remain a small minority of outcomes by scheme count — typically one to three schemes a year against the double-digit run rate of approvals. That is consistent with a planning system that, at the aggregate level, continues to wave through the large majority of large rental-sector schemes that reach a formal decision. The headline story is not that Labour's reforms have made it harder to get BTR and PBSA consented; it is that volume has kept climbing while a small number of individual, often high-profile, cases attract disproportionate scrutiny.

That distinction matters for how the market should read individual called-in decisions or ministerial interventions. A single contested scheme in a sensitive borough is newsworthy, but REalyse's pipeline data suggests it should be read as an outlier against a backdrop of continued approval momentum — not as evidence of a systemic shift against the sector. Investors and lenders benchmarking scheme-level planning risk should weigh individual case studies against this broader approval trend, rather than extrapolating from any single decision.

Reading the signal in named schemes

Sector-watchers have pointed to major developers' London pipelines — Watkin Jones among them, given its long track record in both BTR and PBSA delivery — as bellwethers for how committees and the Secretary of State are treating scale in the new political environment. The pattern worth tracking is less "approved or refused" and more how long each scheme takes to move through planning stages, how far unit numbers or height are negotiated down between application and consent, and whether affordable housing or nutrient neutrality conditions are becoming a more binding constraint on scheme viability.

REalyse comparables across granted large-scale rental schemes show meaningful variation in the ratio between originally proposed units and units ultimately consented, and in the gap between validation and decision dates. For institutional investors, tracking this variation scheme-by-scheme — rather than relying on national headline announcements — is the more reliable way to price planning risk into BTR and PBSA acquisitions and forward-funding structures.

What this means for yields, viability and lending

BTR and PBSA occupy a specific place in the income-return landscape: assets are typically underwritten on long-term gross yield assumptions rather than short-term capital appreciation, which makes planning certainty and delivery timelines unusually important to the return profile. REalyse yield data across comparable urban rental stock shows the asset class continuing to offer a differentiated income profile relative to general needs housing, but that premium depends on schemes being delivered broadly on the unit counts and timelines assumed at underwriting.

Where planning stages lengthen — even without an outright refusal — holding costs rise, forward-funding drawdown schedules slip, and the effective return to equity compresses. For credit and risk analysts at lenders, this is the more material exposure: not a binary refusal risk, but a duration risk embedded in every large scheme still working through committee, call-in review or reserved matters.

Developers and investors are responding by front-loading engagement with local planning authorities, offering larger affordable housing contributions on schemes in higher-scrutiny boroughs, and, in some cases, favouring outer London and regional cities with faster committee cycles and lower political sensitivity over prime central London sites. This diversification is itself a signal that the market is pricing in planning-stage risk more actively than it was two or three years ago.

Outlook: a pipeline that is moving, but unevenly

The data does not support a narrative of Labour's planning reforms creating a hostile environment for large-scale rental and student housing. Approval volumes for qualifying London schemes have continued to grow through the transition, and refusals remain a small share of outcomes. What has changed is the texture of individual decisions: greater scrutiny on flagship sites, more negotiation over density and affordable housing contributions, and a handful of high-profile called-in cases that serve as visible test cases for ministerial appetite.

For institutional investors, lenders and developers, the practical takeaway is to treat headline called-in decisions as data points rather than trend-setters, and to underwrite planning risk using scheme-level comparables — decision timelines, unit-count negotiation, and borough-level track record — rather than national policy announcements alone. As REalyse's planning pipeline data continues to update through 2026, the schemes to watch will be those combining scale, sensitive locations and institutional funding structures: exactly the profile of the London BTR and PBSA projects currently working their way through the new regime.