Permission Impossible: Why have new home applications ground to a halt?

Housing planning and applications slowdown

If you feel like the housing crisis is getting worse, you’re not wrong. The latest research from the Home Builders Federation has uncovered a shocking statistic: housing planning approvals in England have hit a 13-year low.

In the first quarter of this year, only 39,170 new homes were given the green light. That’s a staggering 32% drop compared to the same period last year. So, what’s going on with house-building? Is the planning system just saying ‘no’ more often?

The real story is a bit more complicated. It’s not only the case that fewer projects are being approved; housing developers are submitting far fewer applications in the first place.

Our co-founder, Alexander Uregian, breaks down the perfect storm brewing behind the scenes in three main factors. 

1. The conveyor belt has jammed: demand-side challenges

Think of volume house-building as a massive conveyor belt. For it to run smoothly, homes need to be coming off the end (selling) at the same rate that new projects are being put on at the start (planning applications). Right now, the end of the belt is jammed.

With mortgages more expensive than at any time in the last 13 years and support schemes for first-time buyers scrapped, the pool of eligible buyers has shrunk. People simply can’t afford to buy. If developers can’t sell the homes they’ve already built, they have no incentive to apply to build more.

In this scenario, the whole system slows down, and the first thing to be cut is the pipeline of new applications.

2. Planning paralysis meets the Building Safety Act

It’s no secret that the planning process is painfully slow, but the new Building Safety Act post-Grenfell may exacerbate this.

While absolutely essential, the new regulations have shifted a huge compliance burden for tall buildings from the building control stage to the planning stage. This has created an enormous bottleneck. Urban development sites are now facing delays of up to a year at the planning stage while an already understaffed system waits for the Building Safety Regulator to review applications.

Is this a solution? These crucial checks could be moved back to the building control stage. This would immediately free up the planning system to – do what it’s supposed to do – “plan” and increase house-building. 

3. Regulatory creep in house-building

On top of everything else, housing developers are facing a wave of new regulations, such as Biodiversity Net Gain (BNG) or the Future Homes Standards. The intentions are good, but the timing couldn’t be worse.

These new rules add significant costs and complexity to projects. The problem is they are being introduced during a major downturn. Build costs and development finance have exploded, while house prices have largely flat-lined. The result is predictable: fewer sites are financially viable, so fewer applications are submitted.

This leaves the government with a difficult choice. Do they postpone these new regulations until the market recovers? Or would that send the wrong message about environmental and safety standards? Is there a middle ground?

To summarise, England’s housing pipeline is grinding to a halt, primarily driven by a sharp drop in new applications from developers. The core issues are threefold: a weak property market caused by high mortgage rates is deterring new projects; the planning system is paralysed by administrative bottlenecks, exacerbated by the new Building Safety Act; and a raft of new regulations are increasing costs at a time when profit margins are already squeezed, making fewer sites viable.

How to get the house-building conveyor belt moving again?

The current situation is unsustainable. A combination of economic pressure, administrative gridlock, and well-meaning but poorly timed regulations has brought the supply of new homes to a standstill.

So, how do we get the housing development conveyor belt moving again? Follow us on LinkedIn to join the conversation.