BLOGS

A policy designed to unstick the system

When the revised National Planning Policy Framework introduced the "grey belt" concept in December 2024, the ambition was clear: release poor-quality, underused green belt land — old car parks, disused industrial yards, land adjacent to existing settlements — for housing, without touching genuinely valued countryside. Local authorities gained a presumption in favour of sustainable development on grey belt sites, provided schemes met the "golden rules" on affordable housing, infrastructure and green space contributions.

A year on, the headline metric planners and government ministers point to is applications. Local authority planning committees across the Home Counties, the West Midlands and parts of the North West have reported a visible uptick in outline and full applications touching green belt boundaries. For developers and investors tracking the planning pipeline through REalyse, that surge is real and traceable in submission volumes and scheme unit counts logged against local authorities historically constrained by tight green belt boundaries.

But a rise in applications is not the same as a rise in delivery. The more interesting question — and the one that matters to anyone underwriting land, forward-funding a scheme or assessing loan collateral — is what happens to those applications after submission: how many convert to permissions, how many permissions convert to starts, and how many starts convert to completions within a normal build programme.

Applications up, but the conversion funnel tells a different story

Government planning statistics have shown a consistent pattern since the reform landed: major residential applications relating to green belt and grey belt land have increased noticeably year-on-year, with several outer London and South East authorities reporting double-digit percentage growth in submitted schemes. That is consistent with what REalyse's planning application tracking shows across affected local authorities — a steady climb in submitted unit counts on sites that would have been effectively undevelopable under the previous framework.

The bottleneck sits further down the funnel. Decision timescales on major applications remain stretched, with many local planning authorities still operating below government's own performance targets for determining major schemes within the statutory period. Local plan reviews, biodiversity net gain requirements, and stretched planning department resourcing all continue to slow the grant of permission, even where the presumption in favour of development should, in theory, accelerate outcomes.

Where permissions have been granted, developers are not always starting on site immediately. Build cost inflation, weaker private sales absorption rates in some regional markets, and the affordability constraints on the "golden rules" contributions (typically requiring at least 50% affordable housing on qualifying grey belt sites) are all cited by housebuilders as reasons for phased or delayed starts. For an investor comparing a grey belt scheme's viability against comparable green field or brownfield sites, REalyse-style comparables analysis — benchmarking achieved sale price per square foot and absorption rates for nearby recent schemes — is essential to stress-test whether the affordable housing quantum still leaves an acceptable residual land value.

Regional divergence: where grey belt is actually converting to homes

The picture is not uniform. Analysis of planning pipeline data alongside completions suggests grey belt momentum is strongest where three conditions align: a local authority with a demonstrable five-year land supply shortfall, land values high enough to absorb the golden rules' affordable and infrastructure contributions, and a housebuilder or master developer with existing operational capacity in the area.

That combination is most visible in parts of the South East and Home Counties — Hertfordshire, Surrey and Berkshire authorities among them — where land values are robust enough to make grey belt viability workable even after affordable housing contributions. In lower-value markets across parts of the Midlands and North, where land values are thinner, the economics of the golden rules bite harder, and REalyse data across comparable planning applications shows a wider gap between permissions granted and units actually started on site.

This divergence matters for lenders and institutional investors assessing where grey belt exposure is genuinely investable versus where it risks becoming a paper pipeline — permissions banked but never built out, tying up sites without adding supply. Credit and risk analysts underwriting development finance on grey belt sites should treat the permission itself as necessary but insufficient evidence of deliverability, and instead weigh it against local absorption rates, achieved sales comparables and the developer's track record of converting similar permissions into completions.

What this means for developers, investors and lenders

For development managers sourcing sites, grey belt land now represents a genuine — if narrower than headline figures suggest — expansion of investable land supply, concentrated in authorities where land values support the golden rules' contribution requirements. Site appraisals should stress-test viability against realistic affordable housing quantums rather than the minimum threshold, and should factor in extended pre-application and determination timescales even under the presumption in favour of development.

For investors and lenders, the surge in applications is a useful leading indicator of future supply, but not a reliable proxy for near-term completions. Tracking the full funnel — submissions, decisions, start dates and build-out rates — across comparable local authorities gives a much clearer read on where grey belt reform is translating into deliverable stock, and where it is simply adding volume to an already backed-up system.

Outlook

Grey belt reform has demonstrably changed the shape of the planning pipeline, but the test of the policy was always going to be completions, not applications. As more grey belt permissions reach the point of decision over the next 12 to 18 months, the gap between grant rates and start-on-site rates will become the clearest signal of whether this reform is a genuine unlock or a pipeline-shifting exercise. Developers, lenders and investors who track that conversion funnel — rather than headline application numbers — will be best placed to identify where grey belt land is a real opportunity and where it remains, for now, land banked on paper.