The government’s ambition to tackle the housing shortage is facing a setback, as fresh statistics highlight that it will fail to deliver the number of homes needed to meet its ambitious target in England.
Deputy Prime Minister Angela Rayner has championed a scheme to build 1.5 million homes by 2029 in a bid to address the crisis.
However, projections from the Office for Budget Responsibility (OBR) cast doubt on this plan, suggesting that even with sweeping planning changes unveiled in Chancellor Rachel Reeves’s Spring Statement, the goal will be out of reach.
Spring Statement: 6 key takeaways for the PRS
Solving the housing crisis is one of the Government's key manifesto pledges. Here's what happened in the announcement:
- Reeves spoke about "getting Britain building again", promising changes to the National Planning Policy Framework which was "too slow" under the Conservatives
- She noted that the Office for Budget Responsibility (OBR) has concluded Labour's reforms will take housebuilding to a 40-year high
- Building 305,000 homes per year by 2029/30 will help deliver over 1.3 million homes in the UK over the next five years, bringing the Government within touching distance of its 1.5 million target
- Reeves officially announced that the Government will provide an additional £2 billion for social and affordable homes next year, which will deliver up to 18,000 new homes
- She also acknowledged that "to build these homes, we need people with the right skills", which is why Education Secretary, Bridget Phillipson, has announced £600 million to train up 60,000 more construction workers
- Finally, Reeves also mentioned how recently announced Planning and Infrastructure Bill will help to cut red tape, speed up the planning process, and help the Government deliver its housing pledges when it becomes effective
Ms Reeves confidently told Parliament that the government would come within ‘touching distance’ of the 1.5 million mark and is projecting 1.3 million new properties by the decade’s end.
However, this total includes home construction across Scotland, Wales and Northern Ireland.
In England, it is estimated that just one million homes will actually be built.
But the OBR’s analysis also reveals that a big chunk of these new builds would have occurred irrespective of the government’s policy shifts.
The forecast shows that Ms Rayner’s planning overhaul will yield just 170,000 extra homes in England – which is barely a quarter of what’s needed to fulfil her pledge.
While ministers tout the financial uplift these properties will bring, the Home Builders Federation warns that broader action, such as easing mortgage access for first-time buyers, is critical to bridge the gap.
A government spokesperson countered that forthcoming initiatives, absent from the OBR’s outlook, will bolster efforts to hit the 1.5 million milestone.
One crucial aspect for hitting the target are mandatory building quotas for local councils to approve more developments.
That’s in response to last year’s dismal record of just over 30,000 projects being greenlit in England.
Neil Jefferson, the chief executive of the Home Builders Federation, told the BBC that "while the planning tweaks are ‘very positive’, tackling ‘other barriers’ is essential to reverse dwindling supply and provide desperately needed homes, further interventions are urgently needed’ to ramp up construction to the necessary scale."
The government insists the OBR’s projections overlook key measures, such as the Planning and Infrastructure Bill, a long-term housing blueprint, and an expanded Affordable Homes Programme, which will drive progress.
A government spokesperson said “the OBR forecast only factors in reforms to the National Planning Policy Framework in England which is just one element of this government’s efforts to increase housebuilding.”
Building Safety Levy rates confirmed
The long-awaited rates for the building safety levy have finally been confirmed by the government in the Building Safety Levy: Technical consultation response published on 24 March 2025.
The government has also confirmed the levy will come into effect in Autumn 2026, a year later than previously indicated. The government has said this is to give those impacted more time to prepare.
The response, confirms a number of important details in respect of the new levy that will assist the industry and local authorities in preparing for the impact on new developments from Autumn 2026.
How will the levy be calculated?
The levy charge will depend on floorspace, measured using gross internal area, with rates per square metre set for each local authority to reflect the variation in house prices.
The levy will be calculated by multiplying the total floorspace in square metres by the applicable levy rate. This is consistent with the established methodology for the Community Infrastructure Levy calculation at planning stage and appears to have influenced the government’s decision on this aspect. Developments built on previously developed land (PDL) known as ‘brownfield’ will receive a 50% discount to levy rates. This will apply where 75% or more of the land within the planning permission redline boundary falls within the definition of PDL.
Levy rates have been published in the response – these can be accessed here – and range from £100.35 for non PDL in Kensington and Chelsea (£50.17 for PDL) to £12.70 for non-PDL in County Durham (£6.35 for PDL). The rates will be reviewed every three years.
The response confirms that in calculating the floorspace, communal areas will be subject to the levy charge. This is despite the fact that some respondents to the consultation raised concerns that this would have a disproportionate impact on developments with a higher proportion of communal spaces such as flats, build to rent properties and integrated retirement communities, which are not revenue generating and so should not be taken into account.
What developments are in-scope of the levy?
All new dwellings requiring a building control application in England will be subject to the levy. This will include purpose-built student accommodation, the build to rent sector, independent retirement communities, housing with care, and similar, and age-restricted general market housing.
Certain residential buildings which provide ‘important community facilities’ and certain communal accommodation are exempt including affordable housing, non-social homes built by not-for-profit registered providers, NHS hospitals, care homes, supported housing, children’s homes, domestic abuse shelters, accommodation for armed services personnel and criminal justice accommodation.
In addition, to protect smaller businesses, developments of fewer than 10 units are exempt. The government also intends to include several other exemptions including hotels.
Who will collect the levy?
The response confirms that local authorities will be tasked with collecting the levy on behalf of central government. It also sets out how the government intends the levy collection process to operate.
Information will need to be provided to the local authority or the Building Safety Regulator when an application for building control approval is submitted or when an initial notice is submitted by an RBCA and the client to the local authority. At application/initial notice stage information required will include planning information and the number of dwellings that will be created by the development, or bedspaces in the case of purpose-built student accommodation.
Further information will be required with the first commencement notice submitted in respect of the relevant initial notice or application. This will include information as to whether exemptions to the levy charge apply. If the work is chargeable, then information will also have to be provided as to whether the development is on PDL and the Gross Internal Area of the chargeable floorspace of the development. The response states that supporting evidence will also be required and guidance will be produced to set out what is considered appropriate. Information provided will be subject to spot checks by the local authority.
Failure to provide the information will be a ground for the rejection of the application for building control approval or initial notice.
The collecting authority will then have five weeks following the submission of the levy information accompanying the first commencement notice by the client (or eight weeks if a spot check is taking place) to calculate the levy amount. The collecting authority will issue a notice of levy liability and the levy can be paid following receipt of this notice. The levy should be paid in full prior to the client applying for the first completion or final certificate for the works under the application or notice.
The government does not intend for the payment of the levy to be phased or staged. This may impact larger developments completing in phases where the levy payment for the whole development will be due prior to the client applying for the first completion certificate. Alternatively, a strategy of phased building control applications might be a possibility to mitigate that risk and more closely match the levy to development progress, if that will be permissible in the regulations when they are published.
Failure to pay the levy will result in the withholding of a building control completion certificate, or rejection of a final certificate. In practice this will prevent occupation of the development if those certificates are not received.
Going forward
The full detail of the levy will be confirmed when the levy regulations are laid in Parliament, which is expected to be later this year. The government has set a revenue target for the levy of £3.4 billion and has kept the scope of the levy wide. However, the implementation of the levy comes at a time when the government has set ambitious housebuilding targets.
The government has stated the levy rates have been “designed to protect the viability of house building across England” but have recognised in the response “that the levy may have a small impact on housing supply, particularly where sites are already close to the viability threshold”.
The design of the levy rate may impact the viability of developments in some areas. For example, having a blanket rate for each local authority does not take into account house price variation within each of these areas. However, it remains to be seen the extent to which the government’s approach to calculating the levy rate will impact projects going forwards.
Another possibility is that land prices may have to fall to make developments viable. If that is the case, then the ultimate funders of a significant proportion of the levy may in fact not be developers but those landowners disposing of land for developments that will be caught by the levy, which in some cases will of course be the public sector.