The UK needs 370,000 new homes per year to meet government targets, but with planning approvals at their lowest in a decade, the industry is struggling to keep up.
The latest Housing Pipeline Report from the Home Builders Federation (HBF) highlights the scale of the challenge, showing a worrying decline in planning permissions that threatens future housing supply. Read on to find out more about what’s causing this slowdown and what needs to change.
Planning approvals at a decade low
In 2024, planning permission was granted for just 242,610 new homes – the lowest annual figure since 2014. This represents a 2% drop from 2023 and a staggering 26% decline since 2019. That means over 85,000 fewer homes per year are being approved compared to five years ago.
Despite the government’s recent efforts to address planning system failings, broader issues continue to hinder the industry’s ability to meet demand.
What’s holding back development?
A combination of economic, regulatory and logistical challenges is making it harder for housebuilders to increase supply:
- Lack of buyers: Builders can only build if buyers can buy. The absence of government support for first-time buyers and the difficulty of securing affordable mortgage finance are dampening demand. For the first time in 60 years, there is no significant financial assistance for home ownership, limiting investment in new developments.
- Shortage of housing associations: Many new developments rely on housing associations to take on the affordable housing component. With fewer associations in the market, some projects are stalling or becoming unviable, further reducing supply.
- Rising costs and taxes: New and proposed levies (such as the upcoming Building Safety Levy, which will add between £3,000 and £5,000 per home) are making development financially unfeasible in many areas. These costs come on top of existing contributions for affordable housing, local infrastructure and environmental measures.
- Understaffed planning departments: Local authority planning teams lack the resources to process applications efficiently. Even after an outline permission is granted, delays (sometimes for several years before construction can begin) add significant costs and uncertainty.
- Nutrient neutrality rules: An ongoing ban on new developments in 74 local authority areas due to high nutrient levels in rivers is preventing around 160,000 homes from being built. This is despite the fact that new homes contribute only a negligible amount to the issue.
Industry urges government action
Neil Jefferson, Chief Executive of the HBF, summarised the crisis and called upon the government to do more:
“The latest planning figures show that housing supply in the short and medium terms is at critical crisis levels.
“Whilst we welcome the scale of the government’s housing ambition and the swift action on planning, the industry’s ability to produce homes is being stifled by a range of issues outside of its control.
“Increasing housing delivery will require much more than just planning reform. Government has to address broader issues like financing for homebuyers and ensuring there are sufficient providers in the market to take on the affordable homes developers are building – and reduce the crippling levels of taxation being planned and imposed that are making development across swathes of the country unviable.
“The industry is keen to press the accelerator and play its part in delivering the homes, but further government intervention is urgently needed to enable it to do so.”
What needs to change?
If the UK is to meet its housing targets, planning approvals must rise significantly, but this alone won’t solve the crisis. A broader approach is needed – one that addresses financial barriers for homebuyers, supports affordable housing provision and ensures a fairer tax system for developers.
What do you think? What could be done to accelerate the planning process? How should the government and industry work together to fix the UK’s housing shortfall? Comment over on our Facebook or LinkedIn pages.
10.03.2025
Feature image: Freepik
