BLOGS

Planning reform's promise meets a weaker delivery reality

Housing policy in England, Scotland and Wales has spent the past two years leaning hard into planning reform: streamlined local plan processes, renewed brownfield presumptions, and a stated ambition in Westminster to hit 1.5 million new homes this Parliament. On paper, the direction of travel should be unblocking supply.

The data tells a more complicated story. REalyse planning pipeline data shows total residential units granted approval peaked at over 425,000 in 2022 before falling in each of the following years, down to roughly 227,000 in 2025 - close to half the 2022 figure. Approval rates have followed the same path, sliding from around 65% of applications in 2021 to roughly 50% in 2025. Reform has changed the rhetoric around planning; it has not yet reversed the volume trend.

The approvals-to-delivery gap widens

Planning consents are a leading indicator, not a delivery guarantee, and the lag between the two is exactly where the current disconnect shows up. REalyse transaction data shows new-build sales activity has also softened, falling from over 116,000 recorded transactions in 2024 to around 56,000 in 2025 - a decline that runs alongside, rather than against, the drop-off in approvals two to three years earlier.

Average sold price per square foot for new-build stock has eased slightly too, from around £429/sqft in 2024 to around £416/sqft in 2025, consistent with a market where completions are being absorbed more cautiously rather than accelerating into strong demand. For developers underwriting GDV assumptions, that combination - fewer units in the pipeline and softer achieved pricing - is the practical evidence that reform has not yet loosened the supply constraint at the point that matters: homes reaching the market.

Build-to-rent is a useful bellwether

Build-to-rent (BTR) approvals offer a sharper read on institutional confidence, since BTR schemes are typically underwritten against longer income horizons than speculative for-sale housing. REalyse pipeline data shows BTR units granted planning consent surged from roughly 9,200 in 2021 to over 22,000 in 2022, before falling back to around 12,000 in 2024 and collapsing to close to 3,000 in 2025.

That trajectory suggests institutional investors and developers have pulled back on committing new BTR schemes into the planning system even as reform has been rolled out - likely reflecting higher financing costs, construction cost inflation, and caution around build cost certainty rather than any planning-specific blockage. For lenders assessing pipeline risk in the BTR segment, this is a useful early signal: fewer schemes entering the pipeline now points to thinner completions two to three years out.

Why reform hasn't closed the gap

Three factors help explain why stronger planning intent has not yet shown up in stronger delivery:

• Consent doesn't equal capital. A grant of planning permission removes a regulatory barrier but does not resolve financing, build-cost or presale hurdles - all of which have tightened over the past two years as interest rates and construction costs rose.

• Local plan reform takes years to filter through. Even where reform speeds up decision timelines, the pipeline of applications being decided in 2024-2025 was largely shaped by pre-reform local plans and site allocations, meaning the benefits of policy change are still working their way through the system.

• Viability pressure is squeezing scheme sizes. With build costs elevated, more schemes are being value-engineered down or phased more cautiously post-consent, meaning approved unit counts do not convert one-for-one into delivered completions.

Outlook

For developers, the read-through is that site selection and comparables discipline matter more than ever - REalyse-style comparables and local absorption data can help stress-test whether an approved scheme is genuinely deliverable at current build costs, rather than assuming consent alone de-risks a project.

For lenders and investors, the widening gap between approvals and completions is a useful early-warning signal for construction and exit risk on schemes currently in the pipeline. Tracking planning volumes alongside new-build transaction and pricing data - rather than either measure in isolation - gives a clearer picture of where genuine delivery risk sits across regions and asset types over the next 12-24 months.