BLOGS

A widening gap between ambition and approvals

The government's pledge to deliver 1.5 million homes in England by the end of this Parliament implies an average of roughly 300,000 net additional dwellings a year. Industry pipeline data tells a very different story: planning permission was granted for just over 200,000 homes in the year to September 2025, the lowest 12-month total since 2013 and around 38% below the peak seen in early 2022. The Home Builders Federation estimates that hitting the target requires closer to 370,000 permissions annually — current approval rates are running at roughly 55-60% of that pace.

This is not a one-quarter blip. Industry pipeline reports have now recorded ten to twelve consecutive quarters of decline in the number of sites permissioned for new homes, with some quarters representing the weakest approval activity since comparable records began in the late 1970s or 2006, depending on the series used. For an industry that plans investment years in advance, that length of decline matters more than any single data point.

The Planning and Infrastructure Act 2025 was designed to address exactly this bottleneck — streamlining consultation requirements, reforming compulsory purchase powers, and creating a more centralised approach to nationally significant infrastructure and strategic housing sites. But planning reform takes time to filter through to approval statistics, and the current data predates most of the Act's practical effects. The test for local authorities and developers alike will be whether reform translates into faster, more predictable decisions on the ground, or simply shifts where the bottleneck sits.

Where the pressure is concentrated

The national picture masks sharp regional divergence, and this is where REalyse-style planning and pipeline data becomes most useful for developers and lenders assessing where to deploy capital. Approvals have fallen furthest in London, where private housing starts have more than halved and completions are down double digits year-on-year — a combination of Building Safety Act compliance costs, high affordable housing quotas, and softer buyer demand that has made many schemes unviable at current sales values. Savills analysis suggests London secured planning consent for barely a fifth of the roughly 88,000 homes implied by its annual target.

Elsewhere the story is more mixed. Some regions, including the West Midlands and East of England, have seen approvals rise quarter-on-quarter even as the national trend falls, pointing to local authorities that are processing applications more efficiently or benefiting from grey belt release under recent reforms. For developers and investment analysts screening sites, cross-referencing local planning throughput, decision timescales and units-per-consent data against comparable sales values and rental yields is increasingly the difference between identifying a viable pipeline and walking into a stalled one.

For lenders and credit analysts, this divergence has direct underwriting implications. A development loan secured against a site in a local authority with a strong recent approval track record and shorter average decision times carries materially different execution risk than the same scheme in an authority where consents are taking 18 months or more — roughly double pre-2020 timelines, according to industry reporting.

What this means for viability and returns

Falling approval volumes are compounding, not replacing, existing viability pressures. Build cost inflation has left key materials — concrete, cement, bricks and blocks — around 50% more expensive than five years ago, according to industry data, while a new levy on new homes due in October 2026 is expected to add roughly £3,000 per unit to delivery costs, hitting London-weighted schemes hardest given the levy's link to local house prices.

Against this backdrop, gross development value assumptions built on comparable sales data are doing more work than ever. Developers and investors underwriting new schemes need current £/sqft comparables, achieved-versus-asking price discounts, and days-on-market benchmarks by property type and postcode to stress-test whether a scheme still pencils once planning, construction and levy costs are layered on top of a slower, more uncertain consents process. Where planning risk has risen, having granular, area-level pricing and rental evidence to support viability assessments — and to negotiate section 106 and affordable housing obligations with local authorities — has become a core part of deal underwriting rather than a background check.

Rental market data adds a further dimension. With private housing starts collapsing in high-demand markets like London, and net additions running well short of the household formation many demographic models project, undersupply pressure is likely to continue supporting rental growth and gross yields in constrained submarkets, even as sales transaction volumes remain subdued. For buy-to-let and build-to-rent investors, that combination — weaker for-sale pipeline, resilient rental demand — is shaping where institutional capital is being directed.

Outlook: reform meets reality

The Planning and Infrastructure Act 2025 gives government and local authorities new tools, but tools only work if they are used consistently across more than 300 planning authorities with very different resourcing, political appetite and local plan status. Early data from late 2025 showing a rise in planning applications — up sharply outside London following grey belt reforms — offers a tentative signal that the pipeline may be refilling. Applications converting into approvals, and approvals converting into completions, are the metrics that will actually determine whether the 1.5 million target is realistic.

For developers, the near-term priority is disciplined site selection: prioritising local authorities with demonstrable approval momentum and realistic local plans over those still working through backlogs. For lenders and investors, granular comparables, planning pipeline visibility and yield data by location are becoming essential to distinguish viable schemes from those that look attractive on paper but carry outsized planning and delivery risk. The direction of travel on reform is positive; the data suggests it has yet to show up where it matters most — in the number of homes actually being approved.