New Build volumes plummet as councils accused of blocking

The Home Builders Federation, the developers trade body, says planning permissions for new homes continues to fall sharply.

Figures for 2023 - just released - are down 20% year on year, with 2023 seeing the fewest number of sites approved since records began in 2006.

Planning permissions are a lead indicator of future supply levels, and the HBF says there’s now an increasingly anti-development policy environment, including new taxes on building and challenging conditions for homebuyers: this is resulting in decreased investment in future housing delivery.

The HBF says:

• The number of sites that gained planning permission in 2023 dropped to the lowest level for a 12 month period since 2006; 
• The 10,527 sites granted permission in 2023 represented a 16% decrease on 2022; a 23% fall on 2021 levels and only around half of the average annual permissions between 2015 and 2019 when government policies were focused on improving housing affordability;
• The number of units gaining planning permission in England during 2023 dropped to the lowest for any 12-month period since 2014; and
• At under 233,000, the number of units approved in 2023 dropped 20% on 2022, 27% on 2021 and was down 30% compared to pre-pandemic levels, when housing delivery was increasing year on year.

These figures follow government published housing completions figures for 2023 which confirmed that the number of new homes built in Southern England were down by 13% year-on-year.

They also follow what the HBF calls “Michael Goves’ capitulation to NIMBY backbenchers that saw some fundamental planks of the National Planning Policy Framework planning system removed, in particular housing targets for local authorities which were aimed at ensuring councils plan for local housing needs.” 

The two years the Government spent deliberating over the changes saw 64 local authorities withdrew or pause their local plans, the vast majority of these in Southern England.

In its investigation into housebuilding that reported last month the Competition and Markets Authority concluded that, in order to deliver a given number of homes the number of planning permissions granted must be sustained at a somewhat higher level over an extended period. The CMA concluded that the nature and operation of the planning system is exerting a significant downward pressure on the overall number of planning permissions. 

It stated that “local and national targets for housing supply are crucial in enabling Local Authorities’ to establish accurate local plans and approve sufficient applications to meet local and national housing need” and that local plans were “fundamental to giving housebuilders a clear and coherent framework within which to bring forward successful sites, planning applications and build new houses”. 

The CMA made clear that the recent changes to the planning system as a result of the pressure from Conservative backbenchers, would result in fewer planning permissions in the future.

The HBF report shows that the number of units approved in 2023 was the lowest since 2015 in the South East, the lowest since 2011 in London and the lowest since 2012 in the South West. Year on year, each of these regions saw falls of 13%, 34% and 18% respectively. The same regions have already seen annual falls of more than 10% in new build completions.

While some regions saw a slight increase in the number of units approved in 2023 as compared to 2022, across the country there were significant dips when compared to 2021. Unit approvals for the North of England dropped 18% for 2023 compared to 2021, 23% for the Midlands and 28% for the South of England.

Stewart Baseley, executive chairman at the Home Builders Federation, comments: “Amidst a deepening housing crisis and with house building levels already falling sharply, this report should send alarm bells ringing across Government and the country.

“As we have been warning for some time, the sharp decline in housing supply is the inevitable result of several years of anti-growth policy and rhetoric. The politically driven weakening of the planning system will impact housing supply for years to come and needs to be urgently reversed.

“Allied to the total lack of support for buyers in the Budget and the resultant impact on demand for new homes, it is an increasingly gloomy climate for industry and for a generation still clinging to the dream of home ownership.

“Removing the requirement for local housing needs assessments and allowing councils to ignore the housing needs of their areas has been shown by the independent Competition and Markets Authority to significantly impact housing affordability moving forward.

“Rather than listening to the hysterical demands of anti-development backbenchers, ministers would be wise to consider the plight of aspiring homeowners and act on the recommendations of the CMA to restore local housing targets and address the long-term inefficiencies of the planning process.

“The social and economic implications of driving down housing delivery are deepening, with a generation unable to access decent housing and investment in jobs and communities all suffering. Putting short term politics over the needs of the country will have long-term consequences for the economy and society.”