Government urged to address wider housing market challenges to turn the tide of planning approval decline
Planning permission was granted for just 42,000 new homes in England during the third quarter of this year, a 31% drop on the same quarter last year and the lowest quarterly total in over 15 years. The figures demonstrate the scale of the challenge faced by the Government to increase housing delivery to anywhere near its ambitious target.
The Home Builders Federation’s (HBF) latest Housing Pipeline report, based on data from Glenigan, shows that just 1,311 projects were approved between June and September, marking the 11th successive quarter of decline in the number of sites permissioned for new homes. For the year to September 2025, planning permission was given for just 209,781 new homes, marking the lowest for a 12-month period since 2013 and 38% lower than the peak seen in early 2022.
The number of housing projects granted approval in the last year has dropped to 7,500, a 12% drop on the year to Q2 2025 and 1,000 fewer than the previous record low, which was set in June 2025 and just 36% of the number of sites permissioned in 2018. This points to an increasingly small home building footprint across England in the years to come.
The further decline in investment in new housing delivery is due to weaknesses in the housing market and a lack of confidence that buyers can be found for new homes, and a viability crisis as increased taxes, levies and policy costs make many areas economically impossible to build in.
A recent report by Zoopla found that half of the country is unviable, while the Office for Budget Responsibility’s Economic and Fiscal Outlook report, published last month, cited ‘the shortage of viable sites’ as a downside risk that may further threaten housing supply.
Industry is braced for further tax rises next year following the announcement at the Budget that Landfill Tax will double in April 2026 and rise in each subsequent year of the Parliament by a similar amount, and the introduction of a new levy on new homes in October 2026, which is anticipated to result in around £3,000 of additional costs involved with delivering each new home.
The new figures, covering permissions that will be built over the coming years, spark concern for future housing supply. The 12-month total for plots permissioned represents just 57% of the combined annual target for housing delivery of 370,000, established by the National Planning Policy Framework (NPPF)
Industry has been positive about the planning policy changes included in last year’s NPPF and the reforms set out in a new draft NPPF, published earlier this week, which has the potential to encourage greater investment in housing delivery.
However, broader factors determining housing supply need urgent Government intervention if the benefits of these planning policy changes are to be fully realised.
A growing number of potential home building sites are no longer viable to develop as a result of the increasing number of taxes, levies and policy costs imposed on the development of new homes. Meanwhile, despite the country's chronic housing shortage, effective demand for new homes remains suppressed due to a lack of affordable mortgage lending and the absence, for the first time in more than 60 years, of government assistance to support homeownership
London saw the biggest drop in units approved, down 49% on the previous quarter and 72% lower than in Q3 2024. With fewer than 34,000 units and only 910 projects approved in the last 12 months, London’s planning permissions have dropped to the lowest level since the Housing Pipeline Report began recording.
Industry has welcomed the government and London Mayor’s package aimed at improving the business environment for home building in the capital, with policymakers acknowledging the impact on the viability of excessive tax and policy costs, but a new homes levy being introduced in October 2026, which is linked to local house prices, will hit London particularly hard and further dent investment appetite.
Neil Jefferson, Chief Executive at the Home Builders Federation, said: “Today’s figures paint a very worrying picture for future housing supply. The positive planning reforms announced this week are very positive, but home builders continue to grapple with rising policy costs and new taxes, making investment hard to justify.
“Building on improvements to both the planning system and the planning process, ministers now need to consider these rising taxes, new levies and excessive policy costs that make many sites unviable to develop.
“Meanwhile, the lack of affordable mortgage lending is preventing many young people without access to the Bank of Mum and Dad from getting onto the housing ladder, undermining the industry’s ability to build more homes and further entrenching social inequalities.”