BLOGS

A record low that matters beyond Westminster

Official data confirms what developers have felt on the ground for two years: getting a scheme through planning in England has rarely been harder. Roughly 7,000 residential planning applications were granted in the second quarter of 2025 alone - the lowest quarterly figure since comparable records began in 1979. Across the 12 months to June 2025, only around 29,000 residential schemes secured approval, with the number of individual dwellings granted permission falling to about 221,000, the weakest annual total since 2014.

That trend has continued into 2025/26. The Home Builders Federation's Housing Pipeline Report, compiled from Glenigan data, put the rolling annual number of approved projects at a fresh record low for the twelfth consecutive quarter, with the year to Q3 2025 delivering permission for roughly 210,000 new homes - down nearly 40% from the 2022 peak. This is not a blip. It is a structural decline that has been building since 2022/23, coinciding with higher interest rates, rising build costs and a more constrained viability environment for housebuilders.

For an audience underwriting land, forward-funding schemes or lending against residential development, this is a supply-side signal worth watching closely. Fewer approvals today means a thinner delivery pipeline in 2027 and 2028, regardless of how quickly sentiment or financing conditions improve.

Why approvals are falling even as applications recover

The counterintuitive part of this story is that application volumes are not the primary constraint. Planning Portal data shows permission was sought for over 335,000 homes in England during 2025 - the strongest year for submissions since 2020, and roughly 60% higher than in 2024 outside London. Every English region except London recorded growth in applications last year.

The bottleneck sits further down the pipeline - in conversion rates, committee capacity, Building Safety Regulator throughput for higher-risk buildings, and site viability. REalyse's planning dataset shows average decision times on major residential schemes running at around 249 days nationally, but with wide regional variation - some local authorities are taking over 340 days to determine major applications, while others clear equivalent schemes in under 220 days. That gap is itself a data point: it suggests the slowdown is as much about local authority capacity and resourcing as it is about national policy settings.

London illustrates the extreme case. The capital saw planning applications fall by almost a third in 2025 even as the rest of England surged, and fewer than 34,000 units were approved across the year to late 2025 - the lowest since industry pipeline reporting began. For investors weighing London exposure against regional markets, this divergence is increasingly hard to ignore when building comparables and site appraisals.

The maths behind the 1.5 million homes target

Labour's manifesto commitment implies delivering around 300,000 net additional homes per year in England across the parliament - a rate not sustained since the 1970s. Analysis from the Resolution Foundation shows that, based on the historical relationship between approvals and completions, hitting that net additions figure requires an annual approvals rate closer to 380,000 dwellings. Current approvals are running roughly 160,000 below that threshold.

The arithmetic compounds. Every year the country undershoots, the required run-rate in later years climbs further. Some analysts estimate that catching up now would require close to 339,000 homes approved annually for the remainder of the parliament - a level England has never sustained in the modern planning era. Savills has separately forecast around 840,000 completions in the five years to 2028/29, roughly 42% short of the target, while cautioning that even with policy support removed as a constraint, the sector's workforce and supply chain capacity would struggle to exceed 1.2 million completions at full stretch.

For lenders and institutional investors, this matters in two directions. First, scarcity of newly-approved stock in high-demand submarkets can support pricing and rental growth for existing assets - relevant to anyone holding or acquiring completed build-to-rent or single-family rental portfolios. Second, it raises underwriting risk for schemes reliant on a swift route through planning, particularly where committee-level decisions or Building Safety Regulator sign-off (for higher-risk residential buildings) sit on the critical path.

What the Planning and Infrastructure Act 2025 changes - and what it doesn't

The government's response has been the Planning and Infrastructure Act 2025, which received Royal Assent in December 2025. It introduces mandatory spatial development strategies, redirects planning committees toward major schemes rather than minor applications, streamlines compulsory purchase powers to curb "hope value" inflation, and locks in five-yearly reviews of National Policy Statements for nationally significant infrastructure.

Early signs are mixed. Building Safety Regulator decisions picked up sharply in Q4 2025, reaching 673 approvals compared with just over 200 in Q1 2025, and the live caseload at Gateway 2 has started to fall. But the £39 billion Social and Affordable Homes Programme, while the largest social housing investment in a generation, is explicitly a ten-year programme - only a fraction of it will land within this parliament. Meanwhile, new cost pressures are stacking up alongside reform: a Building Safety Levy launching in October 2026 is expected to add several thousand pounds per home, and Landfill Tax is set to double from April 2026, both of which will weigh on scheme viability in exactly the areas where approvals are already scarce.

For developers and their funders, the practical takeaway is that reform is unlikely to be a quick fix. Confidence is visibly returning at the application stage - the 60% jump in submissions outside London is genuine evidence of that - but the conversion of applications into approvals, and approvals into completions, remains the constraint that will determine whether the 1.5 million target is missed by a wide or narrow margin.

Outlook

The record-low approval figures are best read as a leading indicator rather than a verdict on today's market. Comparable data on approval timelines, committee decision patterns and viability by local authority - the kind REalyse tracks across England's planning pipeline - will be the clearest early warning of where delivery risk is concentrating over the next two to three years, and where site values may need to reflect a longer, costlier route to consent. Investors and lenders positioning now would do well to weight local planning throughput as heavily as headline demand and yield data when assessing where the next wave of viable development sites will actually emerge.