The government is almost a year into the first year of a five-year Parliament in which it has promised to deliver 1.5 million homes.
The pledge was made in response to low construction rates and a perceived need to build a huge number of new homes to meet the demand for housing in this country.
The lack of supply and the growing demand for homes are the crucial factors defining the UK property market. So, if the government could increase construction rates, the results would have an impact on all homeowners and renters in the UK.
What is the update?
The number of new homes granted planning permission in England has dropped by 17% on the same quarter last year to 44,520. The figure is the lowest quarterly figure since 2012 and is down by a third (33%) on its peak.
Meanwhile, the rolling annual number of homes permissioned in England stood at 221,900 in the year to June 2025, meaning that investment in new housing sites has slumped to the lowest 12-monthly rate in 12 years.
Tenth successive quarter of decline
The figures, from the Home Builders Federation’s (HBF) latest Housing Pipeline report, are based on data from Glenigan. They show that only 1,410 sites were approved between April and June, marking the tenth successive quarter of decline.
In total, 8,200 sites were permissioned in the 12 months to June, the lowest rolling outturn recorded since the data series began two decades ago. It’s also fewer than half the number of sites that were granted permission during 2019.
The HBF says that the new figures show the huge challenge the Government faces to achieve its housing targets, with a range of indicators all showing that housing supply levels are flatlining at best at around 200,000 homes a year. This is short of the number needed to get to the much vaunted 1.5 million homes target for this parliament.
370,000 permissions required a year
To meet its pledge of delivering 1.5 million homes by 2029, an estimated 370,000 permissions per year are required, on average. However, current approval rates are at just 60% of that target.
Neil Jefferson, chief executive at the Home Builders Federation, says "rising regulatory costs and taxes are being compounded by delays in processing planning applications as well as poor access to finance. A lack of affordable mortgage lending is suppressing demand for new homes, particularly amongst young people. Without any government support for first-time buyers for the first time in decades, the potential market for new homes is being limited.
This research highlights the fragility of the housing pipeline and a continued downward trajectory that shows little sign of changing soon. Without meaningful action to tackle constraints on housing delivery, the early confidence that industry placed in the Government will undoubtedly begin to wane.”
The figures are supported by the September edition of the Construction Index from Glenigan, which shows residential construction starts fell 18% in August compared to the previous three months, finishing 16% below 2024 levels. Private housing fell 16% during the Index period and 16% compared to the previous year.
Glenigan economist Drilon Baca says “many contractors and subcontractors will be deeply frustrated by the apparent ‘false start’ performance-wise, especially within the residential verticals.”
PDR
Permitted Development Rights (PDR), once seen as a promising tool to ease the burden on the planning system, remain underused. Class MA (commercial to residential conversions) and Classes AA to AD (upward extensions) offer a faster, more flexible route to housing delivery—but uptake and approval rates are stubbornly low. In the 2023–24 year, Class MA applications accounted for just 0.04% of all planning submissions, while nationwide there were only 274 applications for upward extensions under Classes AA–AD.
Why Reform Matters Now
Despite growing demand, over 1.2 million homes with planning permission have not yet been built. Alongside this sits an estimated 700,000 empty homes across the UK. Unlocking even a portion of these would make significant headway toward meeting national housing targets.
But planning delays and inconsistent decision-making are eroding developer confidence. In Q1 2025, only 61,453 permissions were granted from over 90,000 applications—an all-time low. Meanwhile, SME developers, who are best placed to deliver infill schemes and localised conversions, are retreating from the market altogether.
PDR reform is not a silver bullet—but it is a shovel-ready opportunity to unlock homes quickly, affordably, and sustainably. Used properly, PDR can deliver good-quality housing in existing settlements with minimal public subsidy and without major new infrastructure.
Targeted Reform: Class MA and Classes AA–AD
The current application of PDR—particularly Class MA and Classes AA–AD—is riddled with arbitrary exclusions, vague conditions, and subjective decision-making by LPAs.
Key recommendations include:
- Lift the blanket ban on PDR in Areas of Outstanding Natural Beauty (AONBs): Many AONBs include well-connected, sustainable settlements with viable underused commercial premises.
- Clarify key conditions: Transport impact should relate only to highway safety, not wider policy matters like cycle parking. The ‘natural light’ requirement should be reframed as ‘satisfactory daylight’ and benchmarked to Design Codes.
- Modernise outdated restrictions: For upward extensions, the prohibition on buildings pre-dating 1948 and those under three storeys is illogical. A rolling three-year age threshold would be more practical.
- Permit combined use of Class MA and Classes AA–AD: Allowing upward extensions on buildings already converted via PDR makes efficient use of land and encourages comprehensive development.
- Allow height flexibility for compliance: Features such as lift overruns—needed to meet modern accessibility standards—should not automatically disqualify a proposal.
These changes would give developers greater clarity and reduce the high refusal rates that currently deter uptake.
The Strategic Opportunity
PDR reform and mandatory Design Codes offer a rare chance to address multiple problems at once:
- Boost Housing Delivery: By removing barriers to conversions and upward extensions, we can make faster progress on meeting housing targets.
- Support SME Developers: Simplified rules and lower risk make PDR more attractive for smaller firms who build out quickly and locally.
- Enhance Planning Capacity: Reducing pressure on full planning routes allows planning officers to focus on strategic and complex applications.
- Maintain Quality and Character: Design Codes ensure that accelerated delivery does not come at the cost of liveability or local distinctiveness.