Will the revised National Planning Policy Framework help achieve the Government’s 1.5 million new homes target?

Housebuilders regularly cite the planning environment as a major barrier to housing delivery across the country. For example, the recent House Builders’ Survey by the Federation of Master Builders showed that 55% of respondents cited the planning system as the top major barrier to the delivery of new homes.

In particular, the time taken to gain planning permission is a hindrance. Over half of respondents to ­­­the latest Home Builders Federation survey reported waiting over a year to secure planning permission. In London, it took an average of 616 days to receive planning permission in 2024, up from 167 days in 2011. There was a notable increase post-COVID, with many local councils still struggling with resources to process planning applications in a timely manner.

The Government recently completed a major revision of its National Planning Policy Framework (NPPF) to help address these challenges and meet its target of building 1.5 million homes over the next Parliament.

The original NPPF, published in 2012, introduced a presumption in favour of sustainable development, encouraging local planning authorities to plan positively for new development and approve proposals wherever possible. It consolidated over two dozen previously issued documents, including Planning Policy Statements and Planning Policy Guidance Notes, into a single, streamlined document. It aimed to create a genuinely plan-led system, empower local communities, and promote high-quality design and standards.

The Framework has since undergone several revisions, with the latest update being the most significant since its inception. This update reintroduced the “mandatory housing targets” and established firmer rules for authorities constrained by the Green Belt. Further measures were also announced to increase the planning capabilities and resources of Local Planning Authorities.

Will these NPPF revisions alone be sufficient to meet the Government’s housebuilding target?

At first glance, historical evidence indicates it might. After its first publication in 2012, there was a boost to housebuilding. Between 2012/13 to 2014/15, the number of homes granted planning permission increased by 57,000, marking a 31% uplift. The upward trend in permissions continued, peaking at 328,000 homes in 2016/17. As a result, the actual number of new homes built (in terms of net additional dwellings) rose from 130,000 in 2012/13 to a peak of almost 250,000 in 2019/20, an increase of 90%.

This clearly indicates that the original NPPF significantly benefitted housebuilding. However, in tandem with planning improvements, the economic backdrop was also improving; the 2014 to 2017 period saw strong economic growth. The country was recovering from the GFC recession, with average GDP growth of 2.5%, compared to 1.5% in the preceding three years. Similarly, the housing market recovery began in 2013, with positive house price growth for the first time in five years, stimulated by continued low interest rates and the improving economic backdrop. These factors are equally likely to have boosted housebuilding activity. Especially when coupled with the Government’s Help-to-Buy scheme that started in 2013, which underpinned demand for new homes and was a major contributor to new home supply during this period. The economic impact is further emphasised by the trend in planning permissions in the 2000 to 2008 period. This was a time of economic growth, during which there was a consistent increase in planning permissions, with a peak in net additional dwellings in 2008/09.

Therefore, the planning framework is only one element in the housebuilding equation. It is evident that a strong macro-environment and other market forces also influence the volume of housebuilding at any given time and can offset planning challenges. According to the Construction and Infrastructure Survey by the Royal Institute of Chartered Surveyors (RICS), the proportion of respondents citing ‘planning and regulation’ as a factor limiting development peaked in 2018, six years after the NPPF was first introduced.

Moreover, not all homes that are granted permission are built. Historic data shows that net additional dwellings, which the target is based on, typically represent approximately 80% of the permissions granted in the prior year. According to the Government’s new calculation methodology, the total target of 1.5 million equates to 370,000 homes per year. Based on past trends, achieving this target would require granting planning permission for approximately 462,500 homes each year. This figure would represent the highest number of homes ever granted planning permission and is about 40% higher than the most recent peak recorded in 2016/17. This increase is particularly unlikely, given that planning permissions are currently at their lowest level in 10 years. While it is not impossible, it may be more realistic to aim for this new level of housebuilding towards the end of the five-year term.

Figure 1: Time taken from submitting a planning application to gaining permission in London (days)

It is certain that the New Towns Programme will eventually lead to an increase in housing delivery due to the scale of these projects. However, the sheer scale of these sites means that they are unlikely to yield housing completions within the current Government’s term.

The average growth rate of net additional dwellings in the five years following the publication of the original NPPF was 12% a year. If we assume this rate of growth each year for the next five years, there would still only be 1.2 million new homes delivered. This would leave a shortfall of 300,000 homes against the Government’s target.

Still, UK housebuilding industry faces additional challenges that cannot be resolved solely through changes to the planning system. One major issue is the persistent skills shortage within the construction industry. The number of people employed in the industry is still 11% below the pre-pandemic level. Similarly, there are currently 37,000 vacancies across the sector, almost 40% higher than they were before the UK’s first COVID-19 lockdown in Q1 2020.

RICS reports that around 44% of respondents to its Construction and Infrastructure Market Survey say that a shortage of labour is currently limiting their activity. Specifically, around a third cite skills shortages in traditional blue collar professions, rising to just over 40% for white collar professionals.

Additionally, 80% of councils are operating below full staffing capacity, according to a recent HBF report. This staffing shortfall is causing significant planning decision delays and inefficient allocation of Section 106 (S106) developer contributions. Without adequate planning resource to allocate these funds, communities are not reaping the social and economic benefits associated with new housing. This is a circular issue, as the lack of benefits prompts more opposition to new homes, slowing housing delivery further. Considering this, the Construction Industry Training Board has calculated an extra 152,000 workers would be needed to meet the Government’s housebuilding target.

Challenges in the Affordable Housing sector will also constrain the delivery of new homes. In a recent survey, the HBF found that over 17,000 (S106) Affordable Homes were uncontracted at the end of 2024. This equates to almost two-thirds of the total number of Affordable Homes funded through S106 agreements in 2023/24. As a result, there are currently 139 sites nationwide facing delays due to uncontracted S106 homes.

Consequently, the inability to sell Affordable Homes will continue to hinder the building of homes across all tenures, and the shortage of workers means sites will remain unbuilt. Therefore, among other measures, support for both the Affordable Housing and construction sectors is crucial in meeting this ambitious housebuilding target.

The latest NPPF revisions are a positive step-change in the planning environment and have the potential to increase housebuilding in England. However, there are multiple factors that drive housing supply, and its success will depend on various other aspects, including local authorities’ ability to implement the Framework, along with wider economic conditions and market forces. Our view is that in isolation, the latest NPPF revisions will not be enough to meet the Government’s ambitious target, and it will need to be combined with both a favourable macro-economic environment and broader Government support for the housebuilding industry.

Figure 2: Housing supply and interest rates