BLOGS

A widening gap between policy ambition and planning reality

The Planning and Infrastructure Act 2025 was designed to unblock England's housing supply, streamlining consenting routes and reinforcing the government's commitment to 1.5 million new homes over this Parliament. Yet the approvals data tells a more sobering story: the volume of residential planning permissions being granted has been falling for three consecutive years, not rising to meet the moment.

REalyse planning data shows residential units granted permission in England peaked at roughly 224,000 in 2021, on the back of a post-pandemic surge in applications. By 2024, that figure had fallen to around 117,000 - close to half the 2021 total, and the lowest annual level in the dataset's recent history. Applications submitted followed the same trajectory, dropping from over 25,000 in 2021 to under 16,000 in 2024.

For an industry underwriting acquisitions, forward funding and development finance against a policy backdrop of accelerating housebuilding, this divergence matters. A target of 1.5 million homes implies roughly 300,000 net additions a year - a level England has not reliably approved permissions for since well before the current downturn began.

The approval rate itself is softening too

It isn't just volume that's declined - the odds of any given application succeeding have also worsened. REalyse data shows the approval rate (granted as a share of granted-plus-refused decisions) has slipped from around 74% in 2021 to roughly 70% in 2024, with early signals for 2025 pointing to further softening. That's a meaningful shift for developers modelling planning risk into land appraisals and GDV assumptions - a few percentage points on approval probability can materially change the risk-adjusted value of a site.

For credit and risk teams at lenders, this trend is a useful input alongside collateral valuations: local authorities with falling approval rates and rising refusal volumes represent higher execution risk for schemes reliant on planning gain, independent of the underlying asset comparables.

The pipeline: where the "missing" homes are sitting

If approvals are falling, the natural question is where demand for new housing consent has gone. The answer, based on REalyse's tracking of applications still awaiting a decision, is that it hasn't disappeared - it's stuck in the system.

Across England, tens of thousands of residential applications currently sit undecided, spanning outline submissions through to detailed and reserved matters stages. The units attached to outline-stage applications alone run into the hundreds of thousands, dwarfing the annual volume of units actually being granted. Detailed applications awaiting decision add a further six-figure sum of units to that backlog.

This is the crux of the reality check for the Act's targets: a large share of the "supply" needed to hit 1.5 million homes already exists on paper, submitted and working its way through local planning authorities. The bottleneck is throughput, not appetite from developers to bring schemes forward. If the Act's reforms genuinely accelerate determination speeds, a meaningful release of pipeline units could follow relatively quickly - but that release has not yet shown up in the granted-units data.

Implications for developers, investors and lenders

• Development managers should treat local authority-level approval rates and average determination times as live underwriting inputs, not static assumptions - REalyse comparables at local authority and postcode-district level can flag where consenting risk is rising fastest.

• Institutional investors assessing forward-funded or forward-commitment deals should stress-test GDV and delivery timelines against the possibility that Act-driven efficiency gains take longer to materialise than policy rhetoric suggests.

• Lenders underwriting development finance should factor planning stage and local authority throughput into risk pricing, given the wide variation in backlog sitting in outline versus detailed stages across England.

• Agents and valuers advising land vendors should be realistic with clients about achievable pricing where sites carry planning risk in authorities with falling approval rates, rather than pricing purely off historic comparables.

Outlook: watching the release valve, not just the target

The Planning and Infrastructure Act 2025 gives government the levers to accelerate determination and reduce discretionary friction in the system. Whether it succeeds will show up first not in the 1.5 million target itself, but in two REalyse-trackable metrics: the rate at which the existing undecided pipeline converts into granted units, and whether approval rates stabilise or continue drifting lower.

Until granted-unit volumes start closing the gap with the pipeline sitting in outline and detailed stages, the 1.5 million homes pledge remains an aspiration running well ahead of what the planning system is currently delivering. For anyone pricing risk into UK residential development - land, debt, or equity - that gap, more than the headline target, is the number worth watching.