UK homebuilders say planning headaches starting to ease

[LONDON] Fewer UK housebuilders are citing planning delays as a major hurdle this year, as government measures aimed at unblocking the long-criticised system begin to take effect.

Some 61 per cent of housebuilders described planning delays as a “significant barrier” to delivering new homes between January and March, according to a survey of more than 50 developers by broker Knight Frank. While the share remains high, it’s down 27 percentage points from a year ago, and the lowest since the survey began in January 2021.

“Concerns about the planning system have long predated our research,” said Chris Benham, head of planning for London at Knight Frank. “Policy changes are beginning to shift the dial and instill more confidence in investors and developers,” he added, noting a positive impact from reinstated mandatory local housing targets and greater flexibility around green belt regulations.

The Office for Budget Responsibility said last month it expects to see 1.3 million more homes by the end of the decade, after upgrading its forecasts and giving a rare endorsement to the economic potential of the Labour Party’s planning reforms that were set out last year. Still, the government is likely to fall about 25 per cent short of its 300,000 homes target this year as the changes take time to increase housing delivery, Bloomberg reported last month.

Roughly half of developers say labour shortages have affected their ability to meet housing targets over the past year, according to Knight Frank’s survey. Higher inflation, increasing building safety costs and bottlenecks surrounding the affordable housing push could also act as barriers to growth, the broker said.

“The challenge lies in delivering these homes within the constraints of viability, especially given the significant rise in development costs in recent years,” said Oliver Knight, head of residential development research at Knight Frank. “It is these financial realities that will determine whether growing interest translates into actual delivery.” BLOOMBERG