What’s holding back house building in the UK?

While some of the dynamics shaping the crisis are shared across England, Scotland, Wales and Northen Ireland, unique regional factors are also at play.

Modus speaks to housing experts from the surveying profession in each region to gauge the impact of housing policies, identify development bottlenecks, and pinpoint key requirements for speeding up delivery.

“The challenge is probably greater than they thought coming in,” says Iain Jenkinson FRICS, executive director in charge of CBRE UK’s planning business. Nonetheless, he identifies positive developments, starting with a raft of planning reforms that aim to accelerate the approvals process for major schemes, alleviate burdens on SME housebuilders, reduce hold-ups associated with biodiversity net gain, and encourage development on underused ‘grey belt’ land.

But laudable as such measures are, they will not be sufficient to speed up delivery when the most pressing difficulty is financial viability, says Jenkinson. “Over the last three years, consistently only half of residential planning permissions ever make it to construction on site.” For many projects, not just in England but across the UK, the combined costs of land, materials and labour exceed the value of the completed development. Meanwhile, the cost of development finance has soared along with UK interest rates.

The 2022 Building Safety Act is also having a significant impact on high-rise housing construction, as developers struggle to implement regulations brought in after the Grenfell Tower disaster. “Gaining approvals is taking up to 12 months, further exacerbating viability challenges,” says Jenkinson.

To break the impasse, state assistance will be required. “The government has allocated significant capital to new homes through the spending review. That will help support a step change in in housing delivery, beyond planning reforms.”

Through Homes England and the National Housing Bank, the government will aim to deploy more than £20bn of ‘patient capital’ in the hope of unlocking a further £53bn of private sector investment to build 500,000 homes.

That approach is already starting to bear fruit through pilot projects in Greater Manchester, such as the Stockport Interchange regeneration scheme, says Jenkinson. He expects progress to accelerate as capital allocated under the 2025 government spending review is deployed from April 2026.

The strategy will be followed by an action plan, which must identify innovative and deliverable approaches that will begin to address the range of systemic issues that impact on supply, says Diana Fitzsimons FRICS, visiting professor in the built environment at Ulster University. “Getting cross-departmental focus on these actions will be the next important step, otherwise the strategy will just gather dust.”

The most pressing issue is the lack of supporting infrastructure for housing development, especially water and wastewater infrastructure. This has seen many private and social housing developments with planning permission held up by lack of mains sewerage connections.

An interim £40m investment in water infrastructure has been agreed by the NI Assembly to allow development of 3,500 houses in the short term. However, innovative longer term technical and funding solutions still needs to be found. In 2015, local government reorganisation saw planning powers returned from central government to 11 new local authorities. Preparation of local development plans has been slow, however, and more housing land is needed around the major population centres.

“Although there have been improvements in the last year and a new chief planner at the Department for Infrastructure is pushing forward a planning improvement programme, local authorities are generally falling well behind targets for the delivery of planning approvals,” says Fitzsimons.

The province has a robust housing association movement that is willing and capable of development. However, it lacks a tested mechanism for funding non-social affordable housing, either to be sold or rented below market value, she adds. An early step towards that goal saw housing association subsidiary Maple & May successfully bid for a capital loan to develop and operate 300 intermediate rent homes across Northern Ireland through a pilot scheme, but “considerably more” funding is needed, she argues.

The authority has increased funding, boosting its 2025-26 affordable housing budget to £437m. “The affordable housing sector in Wales is very well supported,” says Nick Lawley MRICS, a director at Cardiff-based firm Cooke & Arkwright, who advises clients on major residential development projects.

Development for private sale is often more problematic, though, because prices in most rural and post-industrial areas of the country are too low to support development, particularly in the context of increasing construction costs. In the south Wales M4 corridor demand is stronger, but land supply is constrained by the area’s geography.

In common with other parts of the UK, developers frequently face long waits for planning consent because local authorities lack the capacity to process applications quickly. Lawley also identifies strict environmental regulations as a further strain on viability.

Out-of-date development plans are also a constraint, he adds. Unlike England, there is no mechanism for developers to bring forward sites outside plans if the authority is unable to demonstrate a five-year housing land supply. “So, if the local plan is out of date, and there are no more sites that can be brought forward, there's no land supply.”

Welsh housing associations have historically been too small to bring forward large scale developments, but the sector has begun to see consolidation in recent years. Meanwhile, only a small number of national housebuilders active in the region, reducing market dynamism, observes Lawley.

He identifies the increased prevalence of partnerships between national housebuilders and social landlords as a positive trend for delivery of more homes. Pobl Group, one of the largest Welsh housing associations, has formed partnerships with developers including Persimmon and Keepmoat, to support its ambition of building 4,500 new homes by 2030.

By committing to buy a proportion of the development, the registered landlord helps to de-risk the scheme for the developer, while the scheme’s viability is bolstered by the economies of scale available to a large housebuilder, says Lawley.

Development planning has been a major bottleneck for housing supply, he argues. Most local authorities waited for the publication of the Scottish government’s national planning framework document, NPF4 in 2023 to begin their strategic planning, with the result that the earliest plan adoptions are not anticipated until late 2028. Meanwhile National Planning Framework 4 rules out most development on unallocated land.

“We are running out of allocated housing land for development and we are not going to get completions on new unallocated sites, probably until the early 2030s, so it’s a major issue,” says Wood. In September the Scottish government published a Housing Emergency Action Plan, but while it suggests an emergency approach to decision-making it doesn’t go far enough because it fails to encourage councils to approve projects on unallocated sites, he observes.

Pricing that barely matches high development costs is deterring development of flats in urban areas, so it is crucial to create public-private partnerships to support viability, he argues. “There is no equivalent to Homes England in Scotland, so we all jealously look at that organisation.” Developer contributions to local infrastructure levies on larger schemes are also suppressing land prices so that landowners have little incentive to sell, he adds. Strictly defined flood risk assessments also make it difficult to bring forward sites near rivers or in coastal areas.

Meanwhile, concerns over whether the Housing Scotland Bill would introduce rent control on build to rent (BTR) developments, have led investors to halt such schemes. However, the government has made BTR exempt, so Wood is optimistic that when the legislation passes the market will unlock.

Elections for a new authority at Holyrood are scheduled in May and could constitute a further cause for optimism. “I am very hopeful that the incoming new Scottish government, however that's made up, will really start on the front foot, as the incoming Labour government in England did last year, by making housing a key priority,” says Wood.