Fewer new home approvals should alarm the government

Analysis from Glenigan shows that 53,379 new homes were approved between April and June 2024, a 13% drop compared to the same period in 2023.

Rico Wojtulewicz, head of policy and market insight at the National Federation of Builders (NFB) said: “The new Labour government’s job has been made considerably harder by Michael Gove’s decision to remove housing targets and water down housing supply ambition.

“Yet this is only half the story. We have seen many small and medium sized housebuilders (SMEs) exit the industry, not just because councils were allocating fewer sites, but due to the government adding new taxes and ignoring the business impacts of poorly crafted regulations, such as Biodiversity Net Gain.

“I have seen SME housebuilders, some older than the Labour party itself – builders who helped solve the post-war housing crisis – call it a day because the risks associated with planning are simply unaffordable and new regulations are removing any profitability. However, this isn’t just about housing supply; it’s also about the future of our workforce. These sized companies train eight in ten construction apprentices and favour directly employed workers and consistent supply chains.

“The previous government, despite being warned about the consequences of their actions, have torched the construction industry with their party-political actions and to fix this, the Labour government now needs to get their head around how the industry operates in practice and what the price of big builder reliance really is.

“Unless wholesale planning reform is delivered within the next twelve months, the drop in approvals will bite the government mid-way through their term. Not only do existing permissions need to be built first, but due to pre-commencement conditions to satisfy, legal agreements to agree and infrastructure to first build, it typically takes years to go from approval to spades in the ground.

“It is crucial that the government explores which sized sites are seeing fewer approvals, because large sites of more than 250 can take five to ten years to go from approval to completion.

“The National Planning Policy Framework (NPPF) review offers a chance to unpick the broken planning system and NFB will be submitting deliverable recommendations which aim to speed up decisions and supply. These include a ‘medium sized site’ definition of ten to fifty homes, an open ‘call for sites’ for smaller developments, more delegated powers, and reforms to deemed discharge.

“Alongside new towns and the New Homes Accelerator, our NPPF recommendations will get us much closer to achieving the 300,000 new homes a year target.”