Future Outlook for Residential Accommodation in 2025
The Labour government in England aims to build 1.5 million new homes over the current parliament, but achieving this ambitious goal is proving to be a significant challenge. As of mid-2025, only about 186,600 net additional homes were delivered from July 2024 to June 2025, leaving the government over 110,000 homes short of its yearly goal.
To increase housebuilding rates, the government is pursuing a range of strategies. These include planning reforms to streamline and speed up the planning approval process, such as the recently introduced Planning and Infrastructure Bill (PIB). The government is also restarting mandatory housing targets and implementing a strategic approach towards Green Belt land to make more land available for development.
Financial support is another key aspect of the government's strategy. £39 billion has been committed for affordable housing, with 60% dedicated to social rent initiatives. Additional £3 billion in loan guarantees have been provided to facilitate builder access to finance, and support through the Home Building Fund is targeting 54,000 homes financed for smaller developers.
Despite these efforts, several challenges persist. Planning delays, construction labor shortages, and subdued market conditions are posing serious obstacles to reaching the 2025 housebuilding targets. Planning permissions in Q1 2025 were at the lowest since 2012, a 55% drop from the previous quarter. Persistent skills shortages in the construction industry, high interest rates, and the discontinuation of schemes like Help to Buy have further dampened buyer demand and slowed private sector development.
Industry experts and politicians express cautious optimism but underline that system-wide issues must be addressed to avoid continued shortfalls. The government is expected to provide increased clarity and detail on how it intends to boost housebuilding delivery in 2025. The government's approach to, and potential locations for large new settlements, should become clearer during the year.
The New Towns Taskforce, established by the government, is expected to recommend a shortlist of locations for new towns by summer 2025. Choosing the right locations and having the right governance structures in place will be vital for the success of these new settlements. The government is proposing to deliver more housing within the Green Belt, prioritizing Previously Developed Land and lower quality 'grey belt' land.
Sources: [1] The Guardian, "Labour's housing plans face challenges and delays in meeting 2025 targets", 15th May 2025. [2] GOV.UK, "Housing: Delivering the plan to build", 1st April 2025. [3] Office for National Statistics, "New dwellings started in England: 2024-2025", 1st July 2025. [4] The Telegraph, "Planning reforms face criticism as Labour's housing targets remain elusive", 15th May 2025.
- The government's housing policy includes investing in financial support, such as £39 billion for affordable housing and £3 billion in loan guarantees, to facilitate builder access to finance.
- To accelerate housebuilding, the government is implementing strategies like planning reforms, restarting mandatory housing targets, and strategically approaching Green Belt land to make more land available for development.
- Despite these efforts, obstacles like planning delays, construction labor shortages, and subdued market conditions continue to pose challenges in reaching the 2025 housebuilding targets set by the Labour government in England.
