Knight Frank has launched its latest Land Index & Housebuilder Survey for Q3 2024. The quarterly report released by the firm reveals market views from 50 volume and SME housebuilders. Combined, the 50 housebuilders surveyed build around 70,000 homes per year in England.
The latest findings reveal that 85% of the housebuilders surveyed believe the sector does not have the capacity to deliver more than 1m homes over the next five years – significantly short of the Government’s 1.5m target. This includes 45% who said delivery would only reach 1m across the period, while the other 40% think the sector’s capacity is even lower – less than 1m homes.
These findings suggest a significant gap between government aspirations and the industry's perceived ability to deliver, and that substantial obstacles remain in addressing England's housing needs, Knight Frank said.
Ahead of the Autumn Budget, which will be delivered on 30 October, housebuilders’ wish lists firmly focus on government solutions. Almost 60% say they want to see increased funding for planning departments, 56% hope for a First-Time Buyer support programme, while a stamp duty cut is the wish for 49% of respondents.
The survey also reveals a perception that the government's most effective move during its term so far has been to reinstate mandatory housing targets, which was rated as the most effective or second-most effective by over 60% of respondents. This was followed by plans to increase resourcing for planning departments (50%) and making it easier to build on greenbelt land (40%).
Planning challenges remain
Planning constraints are viewed by respondents as the prevailing major obstacle to housing delivery. Respondents ranked planning authority resourcing (52%), uncertain timescales for planning decisions, and S106 affordable housing obligations/viability (both on 43%) as the three most significant obstacles to progressing planning applications.
This is echoed in the responses regarding the most challenging factors for businesses in the sector, with planning delays overwhelmingly identified as the most challenging (78%). This concern persists when looking ahead to the next quarter, with planning delays again topping the list of anticipated challenges (75%).
Knight Frank’s survey respondents are calling for a faster planning process with hard rules surrounding timelines, reasonable S106 and affordable housing requirements, and a greater emphasis on large dense schemes. Some respondents advocate for reduced involvement of planning committees, and the introduction of zoning rights to remove the highly discretionary nature of the UK planning system.
Charlie Hart, head of development land at Knight Frank, said: “While our survey highlights industry concerns about meeting housing targets, we firmly believe these goals can be achievable – but only through a fundamental shift in how we approach housing delivery. The traditional greenfield housebuilder model is just one piece of a much larger puzzle. We need a multi-faceted strategy that embraces the full spectrum of the market – from Build-to-Rent and affordable housing to co-living and senior living developments. London alone has the potential to deliver 80,000+ units annually, with similar opportunities across regional cities.
“Significant global capital stands ready to invest in UK housing – the demand is clearly there; but first we must create the right conditions. Addressing planning constraints, strengthening support for housebuilders, enhancing housing association funding, and introducing smarter buyer incentives are key areas the government should be focusing on.”
Anna Ward, an associate in the residential development research team at Knight Frank added: “The industry's Budget wish list is clear: increased funding for planning departments tops the list, surpassing calls for a revamped First-Time Buyer programme, more incentives and tax breaks to build, and a stamp duty cut. In line with this, efforts to liberalise the planning system are seen as the government’s most impactful steps so far. These include reinstating mandatory housing targets to encourage local authorities to approve development, boosting resources for planning departments, and making it easier to build on greenbelt land.”
Colin Brown, head of planning & development at Carter Jonas, says that funding is his main concern regarding this week’s Budget. He adds: “This remains a stubborn issue for the UK planning system and is something needing urgent attention from the Treasury. Local authority net expenditure on planning has fallen by 43%, from £844m in 2009/10 to £480m in 2020/21 which amounts to just 0.45% of local government budgets allocated to planning services.
“It is also estimated that there remains an overall funding shortfall for local planning authority development management services of £262m, based on the most recent local government spending data. While some of this shortfall will probably be made up by a further increase in planning application fees, there is a need for more funding from central government to help get the system moving. Without new funding, the developments needed to drive economic growth will stall and this has to be a priority area for Government.”
