The Home Builders Federation (HBF) has published its latest Housing Pipeline report, revealing a 17% year-on-year decline in housing approvals for Q2 2025
This represents a 33% drop from the peak and is the weakest quarter for UK planning permissions since 2012.
The HBF warns that this is a sign of frailty throughout the housing market, and that raised taxes on new homes are suppressing investment in other new sites.
The tenth successive quarter of decline
According to data from Glenigan, only 1,410 sites were granted planning permission between April and June, and a total of 8,200 sites were granted permission in the 12 months to June.
This is the lowest rolling outturn since the data series was started 20 years ago.
Further data from the report shows that current supply levels are reaching roughly 200,000 homes per year at most, while the original estimated requirements for the 1.5m homes target are at around 300,000 homes per year. This means that requirements are now around 370,000 homes per year.
Investment is also at a low, with the rolling annual number of homes permitted in England hitting 221,900 in the year to June 2025. This marks the lowest investment level in 12 years, since 2013.
Neil Jefferson, chief executive at the Home Builders Federation, said: “Today’s figures reflect the true state of play for the home building industry. Mounting pressures are limiting viability as rising regulatory costs and taxes are being compounded by delays in processing planning applications, making it increasingly challenging to operate, particularly for the nation’s smaller builders. Meanwhile, a lack of affordable mortgage lending is suppressing demand for new homes, particularly amongst young people. Without any government support for first-time buyers for the first time in decades, the potential market for new homes is being limited.
“This research highlights the fragility of the housing pipeline and a continued downward trajectory that shows little sign of changing soon. Without meaningful action to tackle constraints on housing delivery, the early confidence that industry placed in the Government will undoubtedly begin to wane.
“What’s needed now is decisive action to tackle broader market constraints. Ministers need to look beyond tweaks to the planning system and take a proper look at the market fundamentals that ultimately determine how many homes can be built.
“Investment in new homes depends on the building of those homes being economically viable and for there to be a realistic chance of selling new homes. Loading more and more taxes on home building is working against the overarching objectives of the government to build more homes.”
Wastewater infrastructure is preventing new homes according to HBF report
Earlier this month, the HBF released another report, titled A Drain on the Nation, which examined the country’s infrastructure and water policies.
This report found that wastewater infrastructure in many areas of the UK is holding back the delivery of 30,000 new houses, including 7,000 new homes.
This is in spite of a £2.3bn contribution from water companies in upgrading wastewater infrastructure. Delays in upgrading this infrastructure are often due to wastewater and planning policy.
David O’Leary, executive director at HBF, said: “These delays are yet another example of how misalignment between planning authorities, utility companies, and national policy is choking off housing supply.
“Water companies are legally responsible for ensuring network capacity and have received £2.3bn from developers over the past five years to do so.
“Yet in the absence of clear national direction, planning permissions are being blocked, tens of thousands of homes delayed, and billions of pounds of community investment withheld.”
“With each passing month, the government’s ambitious housing supply targets are slipping further out of reach as public bodies and utility companies impose new barriers to delivery.
“While the Cunliffe Review rightly calls for long-term reform of the water sector, new homes are needed now. Government must reassert the statutory role of water companies, clarify how national policy should be applied, and ensure infrastructure investment reflects housing supply.”
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