Part Two: How a decade of layered housing policy has left the state unable to correct course
In Part One of this series I drew on Ben Judah’s candid admission from inside government, that the UK state wants the output of a dynamic private sector without permitting the conditions that produce it. That tension — between the rhetoric of growth and the reality of what this Government is politically willing to do — runs through every sector of the economy.
In Part Two I’ll apply this tension to housing development. Housing is the proof of concept for whether the state can translate ambition into delivery. It is the one sector where the current Government has made a clear commitment to deliver and a metric to support that ambition – 1.5 million homes over this parliament..
A decade of accumulation
The state has levers over housing delivery. But it has spent decades burying them— layer upon layer of policy, guidance, levy, standard, review mechanism and oversight body. What it has lost is the ability to see what’s there. And more worryingly still, it may no longer know which ones can work and which can’t.
The chronology of intervention is well documented in PropViews — from the Section 24 mortgage interest relief changes in 2015 through to the second staircase u-turn, the withdrawal of Help to Buy, the Building Safety Act’s Gateway 2 regime, Biodiversity Net Gain, and the fivefold increase in landfill tax. Each intervention had its own logic. Many were individually defensible. Aggregated, they produced what the data now confirms: England delivered approximately 201,000 new homes in the twelve months to September 2025, flat on the prior year and structurally incapable of reaching 300,000. In London, private housing starts in the first nine months of 2025 hit a record low. Build to rent is projected to disappear from London supply entirely by 2027.
These are not cyclical numbers. They are the outputs of structural challenges. The causes are not just economic — they are regulatory. The cost stack on a medium-rise London scheme now includes Community Infrastructure Levy, Section 106 contributions, Section 278 highway agreements, Biodiversity Net Gain, carbon offset levies, and from October 2026 the Building Safety Levy. Developer contributions alone can add an estimated £50,000 to £65,000 per dwelling in policy costs before a brick is laid. Approximately £9 billion of those contributions currently sits unspent in local authority accounts. Around £3 billion has been held for more than five years. The system extracts money from development with considerable efficiency. It delivers infrastructure with considerably less.
But there is a second-order problem beyond the accumulation itself. Having put so much grit into the system, the state now has no coherent mechanism to flush away the bits that no longer make sense. Each layer is owned by a different body, was introduced under different political conditions, and interacts with the others in ways that make unilateral reversal unpredictable. This is the Gordian knot Judah identified in part 1 at the macro level.
The NPPF is not the development plan
The Government’s most visible housing lever is the National Planning Policy Framework. It has been revised repeatedly — most recently with mandatory housing targets, a revised standard method, and the return of urban uplift. Ministers speak of it as though it were a dial connected directly to the output of new homes.
It is not. Under Section 38(6) of the Planning and Compulsory Purchase Act 2004, planning applications must be determined in accordance with the development plan — unless material considerations indicate otherwise. The NPPF is a material consideration. A weighty one in some circumstances. But it sits beneath the development plan in the decision-making hierarchy. It does not replace it.
The development plan means the Local Plan and, in London, the London Plan. A local plan adopted in 2017 with restrictive policies on density, affordable housing thresholds, or open space provision remains the primary basis for decisions regardless of what the NPPF says this month. A planning officer can acknowledge the national policy position and still determine the application in accordance with the plan.
This is the central structural dysfunction. The NPPF is the lever the Government can move. The development plan is the lever connected to actual decisions. The two are related but not the same — and the gap between them is where housing policy goes to die. Revising the NPPF changes the instructions without changing the machine running them.
Local plans take five to seven years to produce and require political will that most councils do not have. The Government can reform the NPPF repeatedly — as it has — but until those reforms are embedded in adopted local plans, their effect on actual decisions is indirect and contested. The policy signal never reliably reaches the coalface.
A taxonomy of broken levers
The NPPF is the clearest example of a lever which when pulled has limited short term effect. So is the repeated announcement of planning reform and Homes England’s remit letters. These generate activity at the policy level that does not translate into permissions granted or spades in the ground.
There are of course other levers but they are owned by different parts of the UK state. The London Plan sits within the statutory development plan for Greater London. The London Mayor controls it. The viability methodology, the affordable housing thresholds, the fast-track regime, the Late Stage Review — these are Mayoral instruments. Central government can opine and encourage, but the machine is not theirs to operate. The current Mayor’s emergency London Plan Guidance measures, currently subject to legal challenge from multiple boroughs, demonstrate just how contested even the most modest use of those instruments can become.
There are also levers that no longer exist. Help to Buy supported around 39,000 sales per year across its lifespan. It was withdrawn without replacement. The buy-to-let investor market that provided pre-sale certainty to medium and high-rise schemes was systematically dismantled between 2015 and 2020. Both decisions had defensible rationales. Neither was replaced with an alternative mechanism for generating the demand certainty that unlocks equity and debt finance on complex schemes.
The bystander problem
There is a personnel dimension to this that policy analysis typically elides. The UK housing delivery system is staffed, at almost every tier, by people with no personal stake in output and many of which have been disempowered by over-regulation.
Net expenditure on local planning fell 43% between 2009/10 and 2025/26. 91% of planning departments report recruitment difficulties. The national shortage of planners is estimated at over 2,200. 94% of SME planning applications miss the statutory eight-week determination deadline. Applications decided at committee take an average of 53 weeks. The response to under-resourcing has been to add complexity, not simplify. More policy layers mean more things to check, more grounds for delay, more risk of challenge. In that environment, the rational individual behaviour is caution. Caution produces inertia. Inertia produces the record low starts we are now recording.
What would actually move the machine
The reforms that would structurally change the picture are not obscure. They are well-evidenced, internationally tested, and they address causes rather than symptoms. The Government’s reluctance to pursue them is not a knowledge failure. It is a political one — and it is exactly the political constraint Judah identified in Part One.
The current system produces a negotiation that extends for months, even years whose outcome cannot be known at the point the land is priced, and which disproportionately burdens exactly the SME developers the market most needs.
This needs to change. In part 3 we will explore the levers that can work and how we might get to a better place.
