Government policy is increasingly being cited as a drag on housing delivery, as a slowdown in development activity collides with rising build costs, skills shortages and entrenched planning delays.
According to the Housing Oversight Committee, housing delivery was already falling short of requirements before recent policy interventions and now risks deteriorating further, particularly for schemes reliant on complex funding structures.
The committee says weaker developer confidence, escalating regulatory costs and limited capacity within local authorities are combining to push the government’s ambition of delivering 1.5 million new homes further out of reach.
New build housing, which contributes no more than around 1% of total housing stock in any given year, is facing mounting pressure at a time when development finance is already operating in a more cautious environment.
BUILDING SAFETY LEVY PRESSURE
A slowdown in construction is being exacerbated by the introduction of the Building Safety Levy, due to take effect in October 2026, alongside tougher high-rise safety requirements and a chronic shortage of skilled construction workers and planning professionals.
The committee warns that these factors are not only delaying schemes already underway, but are also undermining the financial viability of future developments, particularly mixed-use and affordable-led projects where margins are already tight.
For developers and their funders, the cumulative impact of higher compliance costs and longer planning timeframes is increasing risk and stretching delivery timelines, making some schemes harder to support without additional equity or revised funding structures.
Despite widespread recognition of acute pressure on social housing, the committee found little evidence that local authorities are scaling up in-house development activity or expanding planning capacity to accelerate delivery.
The Housing Oversight Committee, sponsored by The Family Building Society, brings together senior figures from across housing, economics and public policy, including representatives from the development and construction sectors.
RELIANCE ON NEW BUILD UNDER SCRUTINY
The committee argues that the government’s heavy reliance on new build as the primary mechanism for boosting supply is itself part of the problem.
An emphasis on large-scale schemes, combined with slow and costly planning processes, is creating long gaps between application and approval, delaying delivery even in high-demand areas and increasing holding costs for developers.
STRUCTURAL CONSTRAINTS
At its latest meeting, the committee highlighted a number of structural barriers that continue to restrict progress. These include the ongoing slowdown in new build activity, a persistent shortage of affordable housing and the introduction of the Building Safety Levy, which it says threatens the financial viability of many development schemes.
New high-rise safety regulations are also adding cost and complexity, affecting both new build and refurbishment projects, while shortages of experienced planning officers are leading to prolonged decision-making in some regions.
The committee warns that local government reorganisation could worsen these issues, with councils merging resources, deferring planning decisions and ultimately employing fewer planning officers overall.
COST AND COMPETITIVENESS
The committee also points to planning systems in parts of Europe that operate at significantly lower cost, enabling faster decision-making and greater flexibility in development design.
By contrast, the UK’s complex and expensive planning framework is discouraging development activity and limiting innovation, with knock-on effects for developers, lenders and investors seeking certainty around delivery.
Taken together, the committee argues that the current environment risks leaving the government with ambitious housing targets but diminishing means of achieving them.
Without a broader strategy that goes beyond new build – including measures to improve existing housing stock and encourage downsizing – the group warns that housing delivery will continue to lag behind political ambition, with implications for development pipelines and the availability of finance.
