The Intermediary – October 2025 - Flipbook - Page 58
SPECIALIST FINANCE
Opinion
The missing links
in housing reform
S
ince taking office, the
Government has taken
several positive steps
forward in planning
policy reform, including
the reinstatement of local
housing targets, the introduction of
the grey belt policy, and proposals for a
new ‘medium-sized site’ category.
However, planning policy is by no
means the only barrier that must
be addressed. A range of persistent
challenges continue to create
uncertainty for both home builders
and development finance providers.
Without swi and decisive action, the
opportunity to achieve a meaningful
upli in housing delivery during this
Parliament will be lost.
Further action is needed to
improve the planning process itself,
which many developers still find
too slow, costly, and unpredictable.
These inefficiencies not only delay
developments but also make it
considerably harder to secure
development finance.
Developer difficulties
The Government’s commitment to
hiring 300 new planners is a welcome
step in recognising the chronic underresourcing and understaffing of local
planning authorities (LPAs). However,
this falls significantly short of the
2,200 additional planners that HBF
research indicates are required to meet
current demand.
Despite the package of support
for the affordable housing sector
announced in the Spring Statement
earlier this year, developers continue
to face difficulties securing Registered
Providers (RPs) to purchase their
Section 106 affordable homes. A recent
Freedom of Information request by
the HBF found that approximately
8,500 Section 106 affordable homes,
either under construction or due
to commence within the next 12
months, remain uncontracted.This
issue is particularly acute for small to
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The Intermediary | October 2025
medium (SME) developers, many of
whom rely on project-based financing
to support cash flow and commence
construction. Without contracts
in place for the sale of Section 106
homes to RPs or councils, these funds
remain inaccessible, delaying or
preventing delivery.
EMMA RAMELL
is director of external affairs at
the Home Builders Federation
Impact of reform
In the short term, it is vital that
steps are taken to prevent the loss
of affordable homes. HBF has
therefore called on the Government
to encourage local authorities to take
a more flexible approach to the use
of cascade mechanisms in Section
106 agreements, and to engage
constructively in renegotiations where
an RP cannot be secured. This would
ensure that homes can continue to
be built, either by converting to an
alternative tenure or, as a last resort,
through a financial contribution to the
LPA in lieu of affordable housing.
A recurring challenge in recent
years has been the cumulative
impact of new taxes, policies and
regulations on the home building
industry including Biodiversity
Net Gain (BNG), Electric Vehicle
Charging requirements, and the
Residential Property Developer Tax
(RPDT). While each measure may
have merit in isolation, together
they place significant strain on the
viability of sites.
Targeted support
This pressure is set to intensify with
the planned introduction of the
Building Safety Levy (BSL) in autumn
2026 expected to add an average of
£3,000 to the cost of each new home
and the proposed reforms to Landfill
Tax, which could add a further
£15,000 per plot. In many areas, such
costs would render development
entirely unviable.
At the same time, weak effective
demand in the first-time buyer market
due to stretched affordability ratios,
Futher action is
needed to improve the
planning process itself,
which many developers
still find too slow, costly
and unpredictable”
high deposit requirements
and mortgage costs is further
deterring investment.
Recent data from the Office for
National Statistics (ONS) highlights
the scale of the challenge: the
average property in London is now
unaffordable even for households
in the highest income decile, while
in the South East, South West, and
Eastern regions, the average home
is affordable only to those in the top
income decile.
To address these issues, the
Government should consider targeted
support for first-time buyers in the
forthcoming Budget, for example,
through a new equity loan scheme cofunded by home builders.
Such a measure would help convert
latent demand into effective demand,
supporting housing supply, boosting
home ownership, and stimulating
the wider economy, while giving
builders the confidence to invest for
the long-term. ●
