The Budget may have lifted the mood – but housebuilding rebound is not assured
Labour’s Autumn Budget was pitched as a reset moment for growth, planning and housing. For a sector that has endured years of policy churn, planning paralysis and cost inflation, the promise of stability and pro‑development rhetoric is welcome. But scratch beneath the surface, and the prospects of a genuine housebuilding rebound look far more conditional than the political mood music suggests.
For developers, lenders and brokers alike, the key question is not whether ministers are saying the right things about supply – it is whether the system on the ground can actually deliver more homes, at pace, in the current economic climate.
Planning: the system that still can’t say “yes”
For all the Budget’s pro‑growth rhetoric, the real constraint on new supply still lies in how quickly and confidently the system can approve schemes. Ministers have promised more resource and reform, but those working on live applications argue that the real problem is cultural as much as structural: a risk‑averse planning environment in which too many decisions are pushed into the long grass.
“Reeves’ Budget points us in a better direction, but it still falls short of what is needed to unlock meaningful delivery,” says Neil Leitch, Managing Director of Development Finance at Hampshire Trust Bank. “Planning capacity remains the biggest brake on supply, but the deeper issue is the way decisions are made. Too many applications are deferred when they should be determined, and accountability for delays is limited.”
For developers the problem is no longer just waiting a long time for a decision – it is not getting a decision at all. Uncertain timeframes undermine appraisals, push up finance costs and force schemes to be phased, re‑cut or shelved altogether. For lenders, that translates into longer exposure, weaker visibility on exit, and a harder case to support marginal sites.
Even where planning committees are willing to move, a second bottleneck is increasingly choking the pipeline: infrastructure sign‑offs. Leitch points to a growing drag from utilities, highways and other statutory consultees, where approvals routinely run beyond target timelines and, in many cases, now hold up schemes more than planning itself.
“Developers cannot deliver at pace when key partners in the process are unable to respond,” he notes. For brokers and funders backing development clients, that adds yet another layer of uncertainty to already tight programmes – and another reason why some viable projects never make it out of the ground.
Viability: steady costs, shrinking margins
On paper, the construction cost shock has eased. But that does not mean schemes are suddenly stacking up. “Viability remains tight. Costs may have steadied, but biodiversity and wider regulatory obligations continue to squeeze margins, particularly for SMEs,” Leitch warns.
Those smaller builders – the very firms that often deliver infill and community‑scale schemes in the places that need homes most – are feeling the squeeze from multiple directions: higher policy and compliance costs, tougher planning obligations and a demand side that, while improving, is still fragile.
Many are now phasing projects more cautiously, delaying land purchases or stepping back from more complex sites because the route through planning, infrastructure and exit is simply too uncertain. The creation of a National Housing Bank is seen as a positive signal, but, as Leitch notes, there is scepticism that it will shift delivery on the ground if it follows the pattern of previous initiatives.
Demand: stabilising, but far from buoyant
Where there is more optimism is on the demand side. The decision to leave stamp duty untouched has avoided an extra layer of friction, and the move back towards a more predictable policy backdrop is welcome after years of abrupt interventions.
“If mortgage pricing continues to ease, buyer sentiment heading into 2026 should be firmer,” Leitch says, though he cautions that any improvement will remain fragile until mortgage rates and real incomes move in tandem. Rental pressures could also push more households towards ownership, but only if affordability and product availability allow it – another area where brokers will be central.
From a homebuilder perspective, however, the Budget was notable for what it didn’t do for buyers. Steve Turner of the Home Builders Federation highlights that the OBR now expects “just over a million homes” to be added to the English housing stock over the course of this Parliament – fewer than the country needs, and fewer than were delivered in the last Parliament.
“The Budget represented another missed opportunity to address the lack of support for potential home buyers,” Turner argues. Against a backdrop of “a lack of affordable mortgage lending”, he says, demand is being suppressed and builders are being deterred from investing in the land, labour and supply chains required to ramp up output.
Taxes, levies and policy costs bite
READ MORE: Transactions steady as market shrugs off Budget jitters
Turner also raises a point that will resonate with anyone structuring development finance or assessing scheme viability: the cumulative impact of policy costs. While planning reforms are broadly viewed as positive, the worsening economics of new housing – driven by new taxes, levies and regulatory requirements – risk undermining the very supply ministers say they want to unlock.
For many schemes, especially on tougher brownfield or regenerational sites, those additional costs sit on top of already thin margins. The result is fewer plots coming forward, slower build‑out rates, and a development landscape dominated by only the strongest sites and deepest pockets.
Rebound or reset? What 2026 could look like
Taken together, the picture that emerges is one of conditional potential rather than of imminent rebound. There is genuine progress: a more stable fiscal and political environment, policy signals that favour growth and supply, and the prospect of gradually improving mortgage pricing into 2026.
But for that to translate into a sustained uplift in new‑build activity the fundamentals have to settle. Planning performance needs to improve, infrastructure bottlenecks must ease, and developers must be able to see a clear and viable route from land acquisition to exit.
“If the system performs, delivery will follow,” Leitch concludes. “If it does not, no Budget will change the outcome.”
For the housing market, that may be the defining story of the next couple of years. Not whether the rhetoric is pro‑growth, but whether the machinery of planning, infrastructure and viability can finally catch up – turning political ambition into actual homes, and promises of a housebuilding bounce into a pipeline brokers can bank on.
