Planning permissions for new homes fall 15% in Q2

October 23, 2018 / Isla MacFarlane
Planning permissions for new homes fall 15% in Q2

Permissions for 77,704 homes were granted in Q2 of this year. This is down by 15% on the second quarter of 2017, according to the latest HBF/Glenigan’s Housing Pipeline report.

While it is difficult to attribute this to any single factor, it may have been, in part, as a result of uncertainty over the future of Help to Buy post-March 2021, as many plots currently being permissioned will be delivered into and beyond 2021.

Uncertainty around new planning policies ahead of the publication of the Revised National Planning Policy Framework (NPPF), which was eventually published in July, could also have played a part; or the Local elections which often leads to decisions being delayed by local authorities

Nonetheless, planning permissions continue to be granted at record high levels. Permission for more than 350,000 new homes were granted in England in the year to June, as housebuilders continue to invest.

Stewart Baseley, executive chairman at HBF said, “We have seen a 74% increase in housing supply in four years, and the report shows the commitment of the industry to delivering further increases. The fact that permissions are now running at over 350,000 a year shows that builders are investing in the land, and people needed to deliver more homes.”

The Pipeline report shows that for the year up to June 2018, the picture was very positive with 354,646 plots granted planning permission on 20,076 sites. This is the first time for a decade that more than 20,000 sites have been granted planning permission in a 12-month period.

Over the course of the past 10 years, the average permissioned site has increased in size by 58% from 19 units to 30. The figures reflect the first fall in average site size for annualised planning permissions for almost five years (Q4 2013).

This should assist SME builders and better enable them to play their part in delivering increases in supply. The last few years has seen a massive reduction in the number of SME developers and a greater supply base is needed if the 300k target is to be achieved.

The report also identifies some significant regional variations. Approvals were down on the same quarter last year in some areas including London, but in contrast, approvals were up in Wales (25%), Yorkshire and Humber (23%), South West (11%) against a year earlier.

Whilst the wider second-hand housing market has weakened, new build sales have remained strong and with new build mortgages as a percentage of all mortgages rising from around 6.3% in the decade to 2012 to 14.6% last year.

The confidence in the market, supported by Help to Buy, has enabled builders to invest in the land, material and people needed to deliver further increases in supply – but a decision on the future of the Help to Buy scheme, that has played a key part in supporting new build sales, is urgently needed.

Whilst the industry welcomes the continued high level of permissions being granted, it needs to be recognised that it will take months or years for many of these permissions to be processed by Local Planning Authorities to the point where builders are actually allowed to start building.

The industry continues to urge central and local government to invest in the planning system and local planning departments to enable them to deal speedily and efficiently with the volume of permissions now being submitted.

Baseley said, “If we are to get to 300,000 homes a year, we need to see consistently high levels of permissions being granted, and then crucially, processed efficiently. We also need to see the new planning system implemented by Local Authorities as intended and more sites, of all sizes, coming forward. Providing certainty over the future of the Help to Buy scheme, that has been central to the increases in output we have seen, is also key.”

Glenigan’s Economics Director, Allan Wilen, added, “The residential development pipeline remains strong, despite a second quarter dip in residential unit approvals from the historically high levels seen over the last year. Indeed, the number of projects securing approval was up 17% on a year ago as permission was granted for more smaller sites.”

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