Record Low Planning Permissions for New Homes in England

Overview of the Decline in Planning Permissions

Recent reports indicate a significant decline in planning permissions for new homes in England, reaching the lowest levels recorded in over two decades. The Home Builders Federation (HBF) has highlighted that in the first quarter of 2023, only 1,220 sites received planning approval, marking a steep drop from previous years.

Key Statistics

• In Q1 2023, just over 54,000 homes and 1,220 sites for private housing received planning approval.
• This figure represents a 14% decrease compared to the previous quarter and a 17% drop from the same period in 2022.
• Notably, permissions for larger sites, specifically those with ten or more homes, fell to 408, which is also a record low.
• The total number of planning approvals has decreased from around 2,000 in 2022 and nearly 3,000 in 2017.

Implications of the Decline

The ongoing decline in planning permissions has raised concerns regarding the future of housing supply in England. The government has set an ambitious target of 300,000 new homes per year, yet current approvals are falling significantly short of this goal. In fact, the HBF estimates that housing supply could drop below 200,000 homes in 2024, the lowest figure since 2014.

Factors Contributing to the Decline

Several factors have contributed to this downturn in planning permissions:

• Increased Costs: The cost of delivering a new house has surged by an average of £76,000 since 2020, creating financial pressures on developers.
• Policy Reforms: Recent policy reforms aimed at streamlining planning processes have not yet yielded the intended results, limiting new housing developments.
• Market Conditions: Economic uncertainties and changing market conditions have made it more challenging for developers to secure funding and proceed with new projects.

Future Outlook

The HBF's executive chairman, Stewart Baseley, has expressed concerns about the implications of these trends for the housing market. With planning permissions falling by 12% to 50,316 units in Q3 2023, the lowest quarterly figure since the HBF’s Housing Pipeline Report began in 2006, the outlook remains bleak. The total number of projects granted planning permission in the year leading to September 2023 has also seen a decline of nearly 20% from the previous year.

As the housing crisis continues to deepen, stakeholders across the industry will need to address these challenges collaboratively to ensure that the housing supply meets the growing demand in England.