BLOGS

A widening gap between ambition and approvals

The UK government's commitment to deliver 1.5 million new homes in England over this parliament was always going to be a stretch target. But the scale of the challenge has become starker in recent quarters, as official planning statistics point to some of the weakest approval volumes since comparable records began.

Local planning authorities across England have been granting permissions at a materially reduced rate compared with the pre-2022 norm, with net additional dwellings authorised falling well below the annual run-rate needed to hit the government's 300,000-homes-a-year implied trajectory. For developers, lenders and investors underwriting residential schemes, this is not an abstract policy statistic — it is a direct constraint on deal flow, land value assumptions and delivery timelines over the next three to five years.

This matters because planning permissions are the leading indicator for the entire delivery pipeline. A shortfall today in units granted consent typically shows up eighteen to thirty-six months later as a shortfall in starts and completions. If approval volumes stay depressed while political pressure to build intensifies, the market faces a structural mismatch that reforms alone may not close quickly enough.

What the numbers show

REalyse's planning pipeline data — tracking submissions, decisions and unit volumes at local authority level — shows a pattern consistent with the wider sector narrative: a sustained decline in both the number of applications being submitted and the proportion being granted, particularly for larger, unit-dense schemes.

Several dynamics are visible in the pipeline data:

• Approval rates have compressed. Major residential applications are being refused, withdrawn, or left "in progress" for longer than the historical norm, extending average time-to-decision well beyond statutory targets in many authorities.

• Unit volumes per consented scheme have softened in higher-density urban areas, partly reflecting viability pressures from build cost inflation, biodiversity net gain requirements, and affordable housing quotas squeezing scheme economics before they even reach committee.

• Regional divergence is sharp. London and parts of the South East — where housing need is most acute — have seen some of the steepest falls in granted units, while parts of the Midlands and North have held up comparatively better, a pattern relevant to investors reweighting site-acquisition strategy toward higher-conviction regional markets.

• Build to Rent and larger strategic sites are not immune, with schemes tracked in the pipeline data showing extended stages between submission and decision, delaying institutional capital deployment timelines.

For lenders and investors relying on planning status as a proxy for risk and delivery certainty, this compression means comparables and site appraisals need to lean more heavily on realistic, evidence-based timelines rather than historical averages — an area where granular, authority-level pipeline data is increasingly essential to underwriting discipline.

The Planning and Infrastructure Act: reform meets reality

The Planning and Infrastructure Act, alongside associated National Planning Policy Framework changes, was designed explicitly to unblock this bottleneck — streamlining statutory consultee processes, revising local housing need calculations upward for many authorities, and reintroducing stronger presumptions in favour of sustainable development where local plans are absent or out of date.

On paper, these are meaningful structural changes. Mandatory local housing targets, a renewed "grey belt" policy for edge-of-settlement land, and faster determination routes for nationally significant infrastructure all point toward a system designed to raise both application volumes and approval rates over time.

In practice, however, reform implementation lags legislation. Local authorities — many operating with reduced planning department capacity following years of budget pressure — need time to recalibrate local plans, retrain committees, and clear existing backlogs before new policy settings translate into higher grant rates on the ground. Historically, major planning reforms have taken two to four years to meaningfully shift approval statistics, suggesting the current cycle's low point may persist into 2026–2027 before recovery becomes visible in the headline numbers.

There is also a tension between the Act's ambition to accelerate large strategic and infrastructure-linked sites and the reality that much of England's housing shortfall sits in smaller-to-mid-scale schemes, which are more exposed to local political resistance, resourcing constraints at district level, and viability pressures that legislation alone cannot resolve.

What this means for developers, lenders and investors

For institutional stakeholders, the disconnect between policy ambition and pipeline data has several practical implications worth building into current underwriting and portfolio strategy.

Site selection is shifting toward planning certainty. With approval timelines extended and outcomes less predictable, developers and investors are placing greater weight on authorities with adopted, up-to-date local plans and demonstrable five-year land supply — reducing exposure to discretionary, committee-level risk. Comparables and planning-stage data by local authority area are becoming a more central part of site appraisal rather than a secondary check.

Land values are adjusting to reflect planning risk. Sites without resolved consent are increasingly priced with wider risk premiums, while consented sites — particularly those with viable unit densities and workable affordable housing splits — are commanding a growing premium relative to hope-value land, a gap likely to widen further if approval scarcity persists.

Rental and yield assumptions are absorbing delivery delays. For Build to Rent and residential-for-rent investors, slower pipeline conversion into completions supports the case for sustained rental growth in constrained submarkets, reinforcing the importance of tracking gross yield and achieved rent trends alongside planning status when assessing forward income potential.

Lenders are recalibrating risk on development finance. Extended time-to-decision and lower approval certainty raise the cost and complexity of development lending, with underwriting increasingly factoring in authority-level historical approval rates and average decision timescales as a proxy for execution risk, rather than relying solely on national policy commitments.

Outlook: a recovery that will likely be gradual, not sudden

The Planning and Infrastructure Act represents a genuine attempt to address structural blockages in the English planning system, and mandatory local housing targets combined with grey belt release should, over the medium term, support higher application and approval volumes. But the current data makes clear that the system is starting from a genuinely depressed base, and legislative change typically takes several years to fully filter through local authority behaviour, resourcing and committee decision-making.

For institutional players, the near-term reality is one of continued selectivity: favouring authorities and site types where planning risk is lower and evidence-based delivery timelines are clearer, while using granular pipeline data — approval rates, decision timescales, and unit volumes by local authority — to distinguish genuine recovery signals from policy rhetoric. The 1.5 million homes ambition remains achievable in principle, but the planning and development data suggests the path there will be measured in years, not quarters.