A broken planning system risks another year of missed housing targets
Housebuilding remains stuck in low gear despite a modest rise in new work, as fresh data from the Office for National Statistics (ONS) underlines the sector’s ongoing struggle to turn ambition into actual delivery.
According to the latest figures, total construction output fell by 0.3% in the three months to October 2025. Over the same period, repair and maintenance work declined by 1.0%, while new work edged up by just 0.1%, highlighting how fragile the recovery in activity remains.
At a sector level, four out of nine construction sectors posted declines in the three months to October, with private housing repair and maintenance the main drag, down 2.3%. On a monthly basis, total construction output slipped 0.6% in October, reversing a 0.2% rise in September. Both new work and repair and maintenance contributed to the fall, dropping 0.7% and 0.6% respectively.
‘Gap between ambition and delivery remains significant’
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For Neil Leitch, Managing Director of Development Finance at Hampshire Trust Bank, the latest figures are not a surprise.
“These figures simply reinforce what we have seen throughout 2025. Housebuilding has struggled to gain any real momentum and the gap between ambition and delivery remains significant,” he said.
“Developers want to build, but they are operating in conditions where viability is tightening and the system around them is not providing the clarity or support required to maintain activity.”
With build costs, funding pressures and affordability constraints all in play, Leitch warned that the structural issues around planning risk becoming an even bigger brake on housing delivery.
Planning pressures set to intensify
Leitch pointed to mounting strain within the planning system as a key factor holding back new schemes.
“Planning remains a significant obstacle and the pressure on the system is growing,” he said. “A recent study from the Royal Town Planning Institute suggests that one in five planners intends to leave the profession or retire by 2028. The system is already stretched and decision times are lengthening.”
In his view, any further erosion of in-house planning capacity will make a difficult situation worse, particularly in areas where resource is already limited.
“Losing that level of expertise will make it even harder to secure timely approvals, particularly in regions where capacity is already thin. It also widens the gap between the permissions being granted and the number of schemes that actually start on site.”
For lenders and developers alike, that widening gap is critical: pipeline numbers on paper are not translating into starts on site, limiting the flow of new homes coming through and constraining opportunities across the development and mortgage markets.
Beyond warm words: sector calls for ‘consistency, capacity and follow-through’
With a new year approaching, Leitch argued that the sector needs concrete action rather than another round of high-level pledges.
“We are at a point where the sector needs more than a change of tone from government. It needs consistency, capacity and follow-through. There will no doubt be talk of a fresh start in the new year, but we have heard that before,” he said.
“Real progress depends on partnership between policymakers, developers and lenders who understand the realities of delivery. Construction underpins jobs and economic growth across the UK, and without stability and a functioning planning system the risk is that 2026 becomes another year where output falls well short of what the country needs.”
For the mortgage industry, the message is clear: without a more predictable planning environment and a stronger, better-resourced system to move schemes from concept to completion, the supply side will continue to lag demand. That, in turn, risks prolonging affordability pressures for buyers and limiting the flow of new lending opportunities in the years ahead.
