Could a three-year regulatory freeze and tighter Section 106 rules unlock England's stalled housing schemes?

A pipeline under pressure

Development viability in England has rarely faced this particular combination of pressures at once: elevated build costs, higher finance rates for longer than many underwrote for, and a planning system that institutional investors and housebuilders alike describe as unpredictable. Into that environment has stepped a policy proposal gaining traction in industry circles — a multi-year freeze on new regulatory requirements for housebuilding, paired with a tighter, more narrowly defined Section 106 regime that would restrict obligations to mitigation directly tied to a site's own impacts, rather than the broader list of contributions local authorities have increasingly sought.

REalyse's own planning dataset, tracking residential applications across England back to 2012, shows why this proposal is landing now rather than at any other point in the cycle. Quarterly approval rates across that period have averaged around 74%, but the series has swung by more than six percentage points of standard deviation quarter to quarter, and the full run touches a low of 49.4% at its trough — a reminder that approval rates are not a stable backdrop for underwriting, but a variable that has moved sharply within a single market cycle. For developers modelling delivery timelines against that kind of volatility, the case for predictability — even at the cost of some new standards being paused — starts to look more attractive than it would have a decade ago.

Why viability math has shifted

The proposal's logic rests on a straightforward premise: every additional regulatory requirement layered onto a scheme — whether building safety, energy performance, biodiversity net gain, or local design codes — adds cost and time at precisely the point where margins are already compressed. Construction cost inflation has moderated from its 2022 peak, but build costs per square foot remain structurally higher than pre-2021 levels across most residential typologies, and materials and labour costs have not meaningfully reversed. For schemes underwritten on land values struck when costs were lower, viability gaps have widened rather than closed, and in many cases that gap is the difference between a scheme proceeding and one being quietly shelved or re-negotiated downward on affordable housing and other obligations.

Section 106 sits at the centre of that viability conversation because, unlike build costs, it is a negotiated line item. REalyse data on planning applications consistently shows schemes where gross development value assumptions and the scale of developer obligations are renegotiated between permission and delivery, often during the period when a scheme sits dormant waiting for viability to improve. A regime that confines Section 106 strictly to mitigation arising from the development itself — rather than wider infrastructure, affordable housing uplift, or place-making contributions bundled in during negotiation — would in principle narrow that negotiable cost pool and make early-stage viability appraisals more reliable. Whether that is desirable depends heavily on where you sit: for developers and lenders, it reduces downside risk on marginal sites; for local authorities and affordable housing providers, it removes a funding mechanism that has become structurally important in the absence of alternative infrastructure finance.

What the approval-rate data implies for stalled schemes

The practical test of any freeze-and-narrow approach is whether it changes outcomes for the schemes currently sitting in limbo — granted but unbuilt, or withdrawn and resubmitted at lower density. REalyse's planning pipeline shows total proposed units per quarter varying enormously across the same period, from the low tens of thousands at the start of the series to well over 100,000 units proposed in strong quarters, which illustrates how sensitive aggregate housing delivery is to sentiment and viability conditions rather than land supply alone. A regulatory freeze would not, on its own, resolve a scheme where land value assumptions are simply too high for current build costs and achievable sales or rental values. But for schemes sitting just below the viability threshold — common across build-to-rent and mid-market build-for-sale products in regional cities — removing the uncertainty of further regulatory additions over a three-year window could be enough to tip appraisals back into delivery, particularly where lenders are currently applying additional risk premiums for "regulatory drift" during the construction period.

The counter-case: who bears the risk

It's worth stating the trade-off plainly rather than treating a freeze as costless. Local authorities facing constrained budgets have leaned on Section 106 and, where applicable, the Community Infrastructure Levy to fund affordable housing and local infrastructure that central government grant funding no longer fully covers. A narrower Section 106 definition shifts that funding gap somewhere — either onto local authority balance sheets, onto future levy mechanisms, or it simply does not get delivered. For institutional investors assessing planning risk across a regional portfolio, the relevant question becomes less "does this help viability" and more "which local authorities are most exposed to a funding shortfall," since those are the areas most likely to see continued friction in negotiations regardless of what national policy says about regulatory scope.

Outlook for developers, lenders and investors

For development managers, the near-term implication is to revisit viability appraisals on sites that stalled specifically because of Section 106 negotiation rather than fundamental land value mismatches — these are the schemes most likely to benefit if a narrower regime is implemented. For lenders and credit teams, planning risk premiums applied to schemes in local authorities with a track record of expansive Section 106 asks may need re-pricing if the policy proceeds, while schemes in areas with limited historic reliance on developer contributions are less likely to see material change. For investors building comparables-driven underwriting models, the approval-rate volatility REalyse data shows across the last fourteen years is itself the more durable planning risk to price in — regardless of how Section 106 reform plays out, approval timing risk is unlikely to disappear, and scheme-level planning history should remain a core input into any site acquisition decision.