Clogged-up planning and green regulation will cause housebuilding slump, say experts

THE glacial pace of the planning system will trigger a slump in housebuilding, experts have warned, as approvals for construction almost halve in the worstaffected areas.

The industry is braced for a 5pc drop in housebuilding volumes next year and a scramble for land approved for devel- opment after a sharp fall in planning approvals in the North East, South East and West Midlands.

Housebuilders blamed the delays on a resource-stretched planning system and the growing regulatory burden on the sector as construction is brought to a halt in large areas of the country by a controversial ruling by a green quango.

UBS said detailed planning permissions in England slumped 9pc in the first quarter of the year but some regions have suffered a much bigger fall. In the North East permissions tumbled 42pc, while they fell 39pc in the West Midlands and 37pc in the South East.

The House Builders Federation warned that government policy was “starting to constrain growth and create delays, particularly in the planning process”. The group added: “Demand for new homes remains extremely

strong, but the operating environment for builders is becoming increasingly challenging ... A growing regulatory burden and a lack of clarity from the Government on key issues threatens to undermine confidence.”

Marcus Cole, an analyst at UBS, has predicted a 5pc drop in housebuilding volumes in 2023 as a result of the planning problems. He said: “The planning system appears to be slow due to resource constraints, Covid-19 backlog and added complexities such as nutrient neutrality.”

Nutrient neutrality is when development within catchment areas of vulnerable watercourses does not result in an increase in phosphate and nitrate levels in those watercourses.

Mr Cole added: “The issue will be if this continues. That would further accelerate the price of land with detailed planning permission and may mean housebuilders operate with longer landbanks to mitigate planning delays.”

Natural England issued guidance warning councils against building unless they can prove they will not pollute water systems in a major setback to the Government’s target to build 300,000 homes.