BLOGS

A two-speed planning market emerges

Eighteen months into Labour's planning reform programme, the data is starting to tell a clear regional story. Planning Portal figures show applications for 335,000 new homes were lodged outside London in 2025 — a 60% increase on 2024, and the strongest annual total in four years. The momentum built through the year: applications in the final quarter alone were up 61% on the same period in 2024, with BBC Verify's tracker separately confirming a 49% rise in the first half of the year.

London has moved in the opposite direction. Applications in the capital fell by almost a third year-on-year, returning to levels last seen in 2023. Every other English region posted a rise. That divergence is the headline finding from this data, and it has real implications for how developers, lenders and investors allocate capital across UK geographies over the next parliamentary term.

The timing lines up closely with policy. The grey belt classification, introduced in the December 2024 revision to the National Planning Policy Framework, was cemented into statute by the Planning and Infrastructure Act 2025, which received Royal Assent in December. Geoff Keal of TerraQuest, which operates the Planning Portal, has attributed the growth to a "streamlining" of the planning process and to grey belt reforms generating "applications coming through that wouldn't have previously."

What grey belt has unlocked — and where

Grey belt targets land within the green belt judged to make "limited contribution" to the purposes green belt protection is meant to serve — disused car parks, degraded scrub, poorly connected agricultural fringe. In principle it is a narrow carve-out. In practice, take-up has been faster and broader than ministers initially signalled.

By March 2025, more than 100 planning appeal decisions had already cited grey belt in their reasoning — a rapid pace of adoption for a policy barely three months old at the time. Research from the London Green Belt Council and CPRE Hertfordshire found 89% of green belt applications in Hertfordshire over the past year were classified by developers as grey belt, and separate analysis by planning firm Marrons found 57% of green belt schemes taken to appeal in 2025 were approved, compared with 25% in 2024.

REalyse planning data covering sites within and adjacent to green belt across the South East, East of England and the Home Counties shows a marked rise in applications referencing grey belt criteria since early 2025. The geography of the surge is concentrated rather than uniform: growth corridors such as the Oxford–Cambridge Arc, parts of the East of England, Kent, Essex and the wider Midlands are absorbing a disproportionate share of new pipeline, precisely because these are the areas where green belt boundaries, acute affordability pressure and outdated local plans intersect. Authorities without an up-to-date local plan, or unable to demonstrate a five-year (now six-year, for older plans) housing land supply, are most exposed to the strengthened presumption in favour of sustainable development — which materially weakens a council's ability to refuse speculative applications on qualifying sites.

Why London is the outlier

London's fall in applications is worth separating from the "reform effect" story. The capital's own land economics — higher build costs, more complex site assembly, and limited eligible green belt at the urban fringe — mean grey belt has had less direct relevance to Central and Inner London pipelines than to commuter-belt and regional authorities. October 2025 saw the government grant the Mayor of London new powers to fast-track housing decisions, a response to sustained underperformance against the capital's own targets; it's too early in the data to see whether this recalibrates the trend.

For lenders and investors with London-weighted exposure, the practical read is that undersupply pressure in the capital — where planning risk remains comparatively high and application volumes are falling — is likely to continue supporting rental yields and capital values on existing stock, even as pipeline growth outside London points to future competition for occupiers and buyers in commuter and regional markets.

Applications up, approvals still the bottleneck

The application surge has not yet translated into a matching rise in permissions. Official figures show residential planning decisions in the 12 months to September 2025 fell 13% year-on-year to around 37,700, with approvals down roughly 8% to 28,500 — some of the lowest quarterly approval volumes since comparable records began. The Local Government Association has been explicit that planning reform alone will not deliver the scale of homes required, pointing to shortages of construction workers and rising build costs as the binding constraints further down the pipeline.

BBC Verify's housing tracker adds a further caution: new-build Energy Performance Certificate registrations — a reliable proxy for completions, since every new home requires one shortly after finishing — fell 8% in the 12 months to June 2025. Applications are a leading indicator of intent, not delivery; as planning consultancy Lichfields has noted, it can take the length of a parliamentary term before homes in today's pipeline are actually built.

What this means for developers, investors and lenders

The opportunity is real but selective. REalyse data on planning pipelines and comparables suggests the strongest near-term activity is clustering in specific commuter and growth-corridor authorities rather than spreading evenly across England, which argues for screening application volume growth against local plan status, five-year (or six-year) land supply position, and grey belt "golden rules" viability — including the 50% affordable housing requirement — before committing capital to a site.

For lenders, the London-versus-rest-of-England divergence is a useful signal for portfolio concentration risk: sustained undersupply in the capital versus fast-rising pipeline depth in commuter and regional markets will likely produce different value and yield trajectories over the next two to three years. Comparables and achieved-price data by district, rather than headline national statistics, will be the more reliable guide to where returns actually hold up as new supply works through the system.

Outlook

The direction of travel is coherent: applications outside London are at a four-year high, and grey belt reform is a genuine part of the explanation, not just a market recovery story. But approval volumes — not application volumes — remain the binding constraint on housing delivery, and London's sharp pullback is a reminder that reform effects are landing unevenly across the country. For institutional players, the surge in submissions is best read as a screening signal for where to focus due diligence next, rather than confirmation that supply pressure is about to ease.