Michael Holloway of planning and development consultancy Urbana makes the case for a more pragmatic approach from everyone involved in housing development – from the Government down.
The UK’s housing shortage is well documented. Demand continues to outstrip supply, local authorities face increasing pressure to meet housing targets, and few would dispute the need for significantly more homes across the country.
Yet despite widespread recognition of this need, more residential developments than ever are struggling to progress from concept to construction.
It’s increasingly evident that deliverability, rather than a shortage of sites or developer appetite, is the challenge we face.
A widening gap is emerging between what planning policy demands and what can realistically be delivered. That gap is now one of the most significant barriers to increasing housing supply and is affecting developments of every scale, from urban extensions to town centre regeneration sites and smaller residential schemes.
A succession of challenges
For many housebuilders and developers, bringing forward new homes has become an increasingly difficult balancing act. The industry has absorbed successive challenges, including Brexit, the Covid-19 pandemic, supply chain disruption, inflationary pressures and global geopolitical instability over the past few years. The total impact has been a substantial increase in build costs and a more uncertain market environment.
The planning process has also become more complex and expensive. Planning application costs have been growing, with developers committing significant resources before there is any certainty around a positive outcome. Strategic sites can spend years going through the planning system, with delays increasing both risk and cost. By the time consent is secured, the market conditions on which the original viability assessment was based may have changed considerably.
Beyond this, Section 106 agreements and Community Infrastructure Levy contributions are placing growing demands on development. Investment in infrastructure and local services is essential, but there comes a point where cumulative obligations can undermine the very developments that are intended to deliver these wider benefits.
High rise residential development has been fundamentally reshaped by the introduction of the Building Safety Act. The industry’s commitment to safer, higher-quality homes is unquestionable, but stricter compliance requirements, additional design considerations and gateway approvals have inevitably increased both programme lengths and development costs. These are challenges that developers must navigate long before construction begins.
Lower predictability affects confidence
Taken together, these factors are creating a development environment characterised by uncertainty, which is increasingly influencing funding decisions.
Lenders and investors continue to recognise residential property as an attractive investment, but their confidence is built on certainty. When planning outcomes, regulatory requirements, delivery timescales and construction costs become harder to predict, risk appetites become dampened down by caution.
The impact is perhaps most visible in the affordable housing sector, where many schemes, particularly in London and the south east, are facing intense viability pressure. This is particularly frustrating because these locations remain the strongest housing markets in the country, with sustained demand and significant housing need. Many developments are being delayed, redesigned or, in some cases, not progressing at all.
We need to recognise that viability is the mechanism that determines whether homes get built. If housing targets are to translate into delivery, a more pragmatic approach is required from everyone involved in the development process.
The viability conversation
Local authorities should be willing to engage openly on viability where market conditions have materially changed. Policy aspirations remain important, but they must be balanced against commercial reality. A development delivering fewer affordable homes than originally envisaged may still represent a positive outcome if the alternative is no development at all.
The principle is straightforward – 20% of something is better than 40% of nothing.
Similarly, a scheme that delivers 80% of its original ambition still provides much needed homes, creates employment, supports local economies and contributes to housing supply. Allowing sites to remain stalled while stakeholders pursue perfection helps nobody.
Ambitious proposals are important, but viability assessments must reflect market realities rather than best-case scenarios. Robust business planning is becoming increasingly critical as market conditions remain uncertain.
Planning process recommendations
Confidence within the planning process could also be improved. Dedicated officer resources for major housing sites and earlier engagement between planning authorities, consultees and applicants could help reduce delays and improve certainty. Even modest improvements in predictability can have a significant impact on viability and investment confidence.
Ultimately, if the UK is serious about increasing housing delivery, the conversation must move beyond housing numbers alone and focus more on what is genuinely deliverable.
The country has housing demand and development opportunity. It just needs conditions that allow viable schemes to come forward and proceed to construction.
A more collaborative, realistic and delivery-focused approach would benefit the sector. Without it, we risk continuing to approve housing developments that never materialise, while the gap between housing need and housing delivery grows ever wider.
Michael Holloway is a director at Urbana