Planning Approvals Fall and Construction Slows to Record Low
March 7, 2025
Labour’s 1.5 Million Home Target at Crisis Point as Planning Approvals Fall and Construction Slows to Record Low
Planning approvals drop 2% to 242,610 and construction PMI falls to 44.6, marking its worst performance in nearly five years
David Hannah, Group Chairman of Cornerstone Tax, criticises Labour’s poor policy decisions, emphasising that the slowdown in the housing market is exacerbated by decisions that have increased costs for developers and landlords
Labour’s plan to deliver 1.5 million homes by 2029 is in crisis, as official data shows a sharp decline in planning approvals and the slowest pace of construction since 2009. Last year, local authorities approved just 242,610 planning applications, 2% fewer than in 2023 and a quarter lower than the 2019 peak of nearly 330,000. Additionally, construction output has fallen spectacularly with the S&P Global purchasing managers’ index (PMI) for the sector dropping to 44.6 in February – well below the growth threshold and the lowest reading in nearly five years. In light of this, David Hannah, Group Chairman of Cornerstone Tax, the UK’s leading stamp duty advisory firm, highlights that the slowdown is compounded by poor policy decisions that have raised costs for developers and reduced incentives for new projects.
David argues that the government’s lack of joined-up thinking is currently enormously damaging to the residential property market, emphasised by the residential building index seeing a steep contraction to 39.3, marking the worst performance outside of the pandemic since the financial crisis. David criticises Labour’s refusal to reinstate multiple dwellings relief, alongside its increase in the second home surcharge and higher national insurance contributions, which has made large-scale developments less viable. The government’s adjustments to stamp duty thresholds have further disrupted investment in new housing, limiting opportunities for growth in the sector. Exclusive data from Cornerstone Tax further underscores the impact of these stamp duty reforms, revealing that 26% of Brits already are already unable to purchase property due to unaffordable stamp duty costs. In addition to this,19% of UK tenants have had to move rental properties five times as landlords are forced to exit the market.
As a result of these measures, developers have reduced land acquisitions, and many are operating from fewer sites than in previous years. In 2024, only 9,776 new sites were approved – the lowest figure since records began in 2006. Furthermore, to meet Labour’s 1.5 million home target the number of planning approvals would need to rise by 53% annually, yet current trends point in the opposite direction. With developers facing mounting financial and regulatory barriers, new projects are stalling and housebuilding remains far below the levels required to alleviate the UK’s housing crisis. David argues that without urgent policy adjustments, the decline in construction activity and the slowdown in planning approvals will continue, with Labour’s housing ambitions at serious risk.
David Hannah, Group Chairman of Cornerstone Tax, comments:
“The decision from the government to lower stamp duty bands shows a concerning deficit of joined-up thinking. Does this Chancellor and Prime Minister not understand that if they want 1.5 million new homes, they cannot drive landlords out of the market, incur additional charges for first-time buyers and freeze up working capital for developers – which can only be available if these homes are selling. I expect stamp duty receipts to fall significantly and then flatline in Q1 2025, potentially plunging the British property market into a desperate situation. In essence, reducing stamp duty thresholds means that it will ultimately be the consumers who foot the bill.
“Furthermore, it would make sense for the new Government to suspend, or even abolish, the 5% surcharge where properties are being acquired for private rental sector investment. Removing this measure would encourage landlords to increase their holdings, rather than exit the market – reversing the decline in the supply of rental homes and potentially expanding it to the point where demand no longer outstrips supply.”
You May Also Enjoy
Housebuilding sector shows early signs of recovery
The latest Barclays Business Prosperity Index report1 reveals that despite affordability pressures, regulatory challenges and financial caution, four in five businesses (83 per cent) operating in housebuilding and its supply chains remain confident about their outlook for the year ahead. Barclays’ anonymised client data from around 70,000 UK businesses, combined with research from 500 industry…
Read More 
Rightmove launches major updates to its agent qualification CELA
Rightmove’s Level 3 Certificate for Estate and Letting Agents (CELA) will include a new module on Renters’ Rights from April, helping agents to get Renters’ Rights ready before May The Level 3 Certificate for Estate and Letting Agents is included as standard within all Rightmove memberships, with only a fee to the exam board to…
Read More 
Clarity on energy efficiency rules for commercial property needed
Propertymark has written to Martin McCluskey MP, Minister for Energy Consumers at the Department for Energy Security and Net Zero, urging the UK Government to provide urgent clarity on the future of Minimum Energy Efficiency Standards (MEES) for non-domestic property. The letter follows the publication of the UK Government’s Warm Homes Plan, which confirmed that…
Read More 
English Housing Survey 2024 to 2025
English Housing Survey 2024 to 2025: headline findings on housing quality and energy efficiency The latest findings from the English Housing Survey on housing quality and energy efficiency. This is the second release of data from the 2024-25 survey. This report will be followed by a series of more detailed topic reports in the spring…
Read More 
Propertymark responds to latest HMRC property transactions report
Nathan Emerson, CEO at Propertymark, comments: “Based on December 2025’s figures, it is encouraging to see that property transactions remained stable following the Autumn Budget. At a time when many households were concerned about rising living costs, this stability suggests that the Budget provided enough clarity for people to continue progressing with plans to buy…
Read More 
Mortgage activity dips in December
Property industry reaction to the latest mortgage approval data from the Bank of England. The latest figures show that: – Mortgage approvals on house purchases for December sat at 61,013 down (-4.8%) from 64,072 in November. Approvals are down (-8.4%) when compared to the 66,634 seen in December 2024. This decline was expected due to…
Read More