The number of residential units with planning permission has dropped sharply in recent months, falling well short of housing need and undermining industry’s efforts to tackle the housing crisis.
Permission for 64,194 units were granted in the second quarter of 2022, the lowest quarterly total since 2015 except for a drop during the first lockdown in 2020, when the housing market was shut completely. Overall approvals totalled 157,416 units during the first half of 2022, a 21% decline on a year ago.
Planning permissions are a good indicator of the number of houses that are likely to be completed three or four years later, so when these drop, so do the number of future additions to the housing stock.
Regionally, there was a widespread decline in approvals during the second quarter, with the South West the only region to see a rise of 15% against the preceding three months. London, the East Midlands, North East, and Wales saw the sharpest declines with falls of 60%, 58%, 41% and 43% respectively. Yorkshire & the Humber, West Midlands South East and Scotland also saw double digit declines of 31%, 23%, 11% and 24% respectively against the preceding quarter.
Larger sites also continue to dominate the pipeline of permissions. At 57,351 units, housing schemes of ten or more units accounted for 89% of approved units. As local authorities continue to focus on larger sites to meet housing targets, SME builders are increasingly blocked out of the market. 91% of respondents to HBFs recent survey identified land availability as a barrier to growth. Larger sites take much longer to start being delivered, while smaller sites are key to meeting local demand. It is vital that local authorities provide a more diverse mix in the size of sites they are granting permission for.
Although housing supply is up considerably on the trough we saw in 2012, we are still not delivering enough as demand continues to far outweigh supply. The planning process is undoubtedly the biggest hindrance on increasing housing delivery, due to delays in discharging conditions and the under-funding of Local Planning Authorities In our recent survey of SME builders, 93% of respondents identified delays in securing planning permission or discharging conditions as the number one barrier to increasing housing delivery and 92% cited a lack of resource in Local Authority planning departments as another major barrier.
While HBF welcomes the Government’s policy to liberalise planning rules in the forthcoming Investment Zones, it is critical that that planning works in all areas of the country, not just some.
Commenting on the figures, HBF’s Executive Chairman, Stewart Baseley, said:
“The home building industry has delivered around 1.2 million new homes in the past five years, but supply is still falling well short of what’s needed to get a proper grip on the housing crisis.
“As an indicator of future supply, the drop in planning permissions is very concerning, and delays in planning process are the main cause.
“Alongside providing further information on the practicalities of Investment Zones, we call on the Government to set out how it plans to make planning work more efficiently for builders of all sizes across the country.
“We urgently need action to increase the speed at which local plans are developed and adopted, for plans to bring forward a greater number of smaller sites and to ensure LPAs are properly resourced and funded.”
