Over a million homes with planning permission left unbuilt since 2015

The inaugural Planning Portal Market Index has found that more than a million homes granted planning permission since 2015 have not yet been built, equating to around a third of the total given the green light over the period.

The figures cast doubt on the near-exclusive focus of the major parties on boosting house building numbers by tweaking the planning system.

At the same time, planning applications over the first five months of 2024 are at the lowest level since 2020, calling into question the scope for house building numbers to recover in the coming years to meet ambitious manifesto targets.  

The Planning Portal Market Index report offers the most up to date statistics on planning applications in England and Wales, with data reflecting the state of play as recently as 31 May – two months later than the period covered by the most recent official statistics. The statistics are drawn from planning applications submitted to local authorities in England and Wales – more than 95% of which are made through the Planning Portal.

Had all homes granted planning permission ultimately been built, the government’s target of building 300,000 new homes a year would have been achieved in eight of the last 10 years.

Official statistics show that nearly 2.7 million residential units have been granted planning permission since 2015. However, only around 1.5million have actually been built, according to the Office for National Statistics (ONS) – a difference of around 1.2 million.

Geoff Keal, CEO at TerraQuest, the operator of Planning Portal, said:

“These figures suggest that the near-exclusive focus on the planning system in the political debate around housing is misplaced. Until recently, planning permission was being granted for enough new homes to meet the government’s targets.

“While the planning system is by no means perfect, and those homes granted permission could be in the wrong places, this data strongly suggests that policy makers need to look more widely at the factors stifling the completion of homes for which planning permission has been granted.”

The Planning Portal Market Index report highlights the impact of high interest rates, skills shortages in the construction industry and materials shortages as possible culprits.

Geoff added:

“High interest rates have a double impact on the completion of new homes. By dampening the housing market in the short term, they limit the potential commercial rewards available to house builders for proceeding with projects. At the same time, the high cost of borrowing to finance projects in the first place pushes up costs and eats into developer profits.

“This is compounded by the well-publicised challenges facing the construction sector in overcoming skills shortages that have left its headcount more than a quarter of million short of the number needed to meet projected demand. Meanwhile, the supply of fundamental construction supplies of bricks and blocks are down by 4.3% and 9.8% over the year to April, according to official statistics.

“Our analysis shows just how profound the challenges are for policy makers in ensuring enough new homes are built to meet the needs of a growing population."

‍

Download the first Planning Portal Index report.

‍