Over 2023, the number of new homes starting on site in the UK fell by 18% compared to the previous year, according to NHBC figures. Starts are now almost 22% below the peak volumes of 2017. Forward indicators from the planning pipeline suggest that development levels will not be quick to recover. The HBF and Glenigan pipeline report shows planning consents have also fallen by 31% from peak levels in 2019, with planning reform to the NPPF in England and NPF4 in Scotland contributing to growing challenges for volume housebuilders. 

This slowdown raises larger concerns than just our ability to meet housing need. Residential development is also an important mechanism for the provision of affordable housing, community facilities and amenities, both through developer’s placemaking, and land value capture through planning obligations.  

It is hard to measure the total value of these planning obligations; DLUHC’s last measurement of developer contributions in England in 2018-19 amounted to £7bn . This figure has steadily increased over the 2010s from around £3.5bn in 2011-12 as residential volumes expanded. For context, the amount raised by stamp duty across the entire residential sector in 2019 was £15.9bn. The Scottish Government estimated the value of contributions made under S75, S48 and S69 agreements in 2018-19 to be £490 million.  There is no equivalent data available for Wales, and nothing that captures contributions made since 2020. 

However, analysing planning consents, the locations of new public services and affordable delivery volumes can help to understand the wider contribution residential development makes to society across the UK. There are limited other funding routes for new provision of these facilities, particularly in light of the  increasing pressure on local authority budgets. If the development pipeline keeps shrinking, more than just new housing will be lost.

What is being delivered?

We have analysed planning consents granted in England, Scotland and Wales over the last five years for all residential schemes with capacity for over 300 homes in order to understand the breadth of additional amenities provided by housebuilding. 97% of the 840 schemes identified will also deliver some form of community infrastructure. The most common elements to be provided are green spaces, schools, and community hubs. Each of these will be delivered on more than half of the sites within our sample, and will be accessible to the existing community, not just the new residents of the development.   

But the total range of additional benefits is even wider. There are plans to deliver new allotments on 75 developments in our sample, and 113 schemes will include sports pitches and pavilions. In addition to this, 41 new gyms and leisure centres will be built. We have also identified plans for 19 new medical centres, including GP surgeries and dental facilities.

Education

Looking at education specifically, we have identified 425 schools planned to be built alongside residential developments. 80% of these schools will be primary schools or kindergartens. These facilities are being provided by 40% of sites over 300 units but this climbs to 57% when looking at developments with over 1,000 units. 

New residential development makes a significant contribution to the total new provision of educational establishments. In 2023 alone, 21 new schools opened on residential developments across the UK, with space for 12,000 pupils in total. This accounted for over 45% of new school capacity delivered that year, according to data from Edubase.

Parks and green spaces

New residential development is also an important route for delivering new recreational open space. By analysing schemes coming forward since 2019, we have identified 7,500 acres of recreational land that have been delivered as part of new development, equivalent to 1.5% of all land designated as recreational use across the UK. These spaces range from small “pocket parks” of less than half an acre, which often provide play facilities for the immediate neighbourhood, to much larger spaces which will attract a wider range of visitors.

For example, the Arborfield Garrison development of 3,500 residential units in south east England will include 3 acres of play areas across 4 parks, 24 acres of sports pitches and 95 acres of open access natural green space, which will also provide valuable natural habitat for wildlife. The provision of parks is not limited to suburban locations; the first section of a new 7 acre park opened in 2020 as part of the Wembley Park development in London; once the scheme has been completed over 1,000 new trees and multiple public squares will also have been delivered across the site. In Scotland, the Dundashill development to the north of Glasgow city centre will deliver two new play areas and a Sunken Garden on a former industrial site, improving the public realm along the canal network.    

Improving the quality and efficiency of housing stock

Finally, residential development contributes to improving the overall quality of housing in the UK. 14.5% of households currently live in properties that do not meet the Decent Homes standard and over half of homes in the UK have an EPC rating of D or below. In contrast, 84% of new build homes achieve an EPC rating of B or above, meaning they require less energy to run, and will save their occupants an average of £2,000 per year in energy bills. 

The new build sector is also the primary area driving innovation in the source of heating for homes, rather than retrofit. 19.4% of new build homes delivered in the last five years use cleaner energy sources such as heat pumps or community heat networks as their main heating source. This far outperforms the wider residential sector, where heat pumps are used in less than 1% of homes, and almost 80% of households still rely on mains gas. 

The sector will have to reach even higher standards in the future as a result of increasing regulation. From April 2024, new homes built in Scotland will no longer be able to use direct emissions heating systems like oil and gas boilers, while from 2025, new homes in Wales will need to produce at least 75% less CO2 emissions than ones built to current standards. Maintaining a strong flow of housebuilding is therefore fundamental to net zero ambitions, as it both improves the overall efficiency of the UK’s housing stock, and provides a route for expanding supply chain capacity to decarbonise across the whole residential sector. 

Housebuilders’ contribution to affordable housing 

A crucial additional public benefit from residential development is the provision of new affordable housing. Through Section 106, housebuilders in England built 30,100 affordable homes in 2022-23, including 18,500 social and affordable rented homes. This accounted for 47% of total affordable housing delivery for the year. A further 9% of affordable supply was delivered without grant by local authorities and housing associations, largely through cross subsidy from these organisations’ private development programs. Less than half of affordable delivery came through government grant funding.   

S106 has been the single largest method of delivering affordable homes in England every year since 2015-16, accounting for 40% or more of affordable supply every year. The vast majority of homes (98%) built through this route do not receive any grant finance, and are instead subsidised by the private development activity.

The proportion of new affordable housing funded solely by private development elsewhere in the UK is lower, with affordable delivery programmes tilted more towards government grant funding. But private housebuilders still make an important contribution. In Wales, non-capital grant funded affordable delivery has ranged between 850 – 1,150 homes per year for the last five years, accounting for a third of all new affordable homes built in the country. The 2018-2019 Scottish Government Developer Contributions study estimated the annual value of S75 affordable housing provision to be £310 million, against government grant funding of £615 million for the same period. 

Summary

In summary, a continued slowdown in residential development will have significant further consequences for the provision of public services. A strong residential pipeline is important not just for delivering new homes for sale, but also for providing social infrastructure, and providing homes for those in need of sub-market housing. Government policy that supports proactive planning to deliver the right homes in the right places would lead to wider social benefits than simply increasing housing numbers.