How Government Policy Changes Are Shaping New Build Markets
Published by New-Builds Team
Government policy has always been a defining force in UK housing markets, but the pace and scale of change since the Labour government took office in July 2024 has been exceptional. From ambitious new housing targets to fundamental reforms of the planning system, from stamp duty adjustments to expanded affordable housing programmes, the policy landscape for new build housing in the UK is being reshaped in ways that will affect every buyer, developer, investor, and local authority for years to come. The declared goal is simple: build 1.5 million new homes during the current parliamentary term. Achieving it will require overcoming deeply entrenched barriers in planning, construction capacity, skills availability, and political will at local level. Understanding these policy shifts is essential for anyone involved in the new build market, whether you are a first-time buyer trying to get on the ladder, a developer planning your next site, or an investor assessing the sector's long-term fundamentals.
This article provides a comprehensive, factual analysis of every major policy change affecting the new build market in 2025-2026. We draw on primary sources including the National Planning Policy Framework (NPPF), the Planning and Infrastructure Bill, DLUHC housing statistics, HM Treasury fiscal statements, and policy analysis from organisations including the Home Builders Federation, RICS, Savills, and the Town and Country Planning Association. Where policies remain in consultation or implementation, we clearly distinguish between confirmed measures and proposals. Our aim is to give you the clearest possible picture of where policy is heading and what it means in practice for the new build housing market.
The 1.5 Million Homes Target
The centrepiece of the government's housing agenda is the commitment to deliver 1.5 million new homes over the parliamentary term. This represents an average annual delivery rate of approximately 300,000 homes per year — a level that the UK has not sustained since the late 1960s and early 1970s, when a combination of public sector housebuilding and private sector output briefly exceeded 350,000 completions annually. Meeting this target from a 2025 base of approximately 224,000 completions requires an increase of roughly 34% over current output levels.
The government has been clear that this is an "aspirational" target — a direction of travel rather than a legally binding obligation. However, it has backed the aspiration with a series of concrete policy interventions designed to address the key bottlenecks that have historically constrained housing supply: planning delays, land availability, construction capacity, and affordable housing viability.
Where Will the Extra Homes Come From?
| Source of Additional Supply | Est. Additional Units/Year | Key Policy Lever |
|---|---|---|
| Planning reform (faster consents) | 15,000-20,000 | NPPF reforms, mandatory targets |
| New Homes on public land | 10,000-15,000 | Public land release programme |
| Affordable housing programme | 15,000-25,000 | Increased Homes England funding |
| New towns / urban extensions | 5,000-10,000 | New Development Corporations |
| Build-to-Rent growth | 8,000-12,000 | Institutional investment incentives |
| SME builder support | 5,000-10,000 | Simplified planning for small sites |
| Total potential additional supply | 58,000-92,000 | Combined effect of all reforms |
Even taking the upper end of these estimates, closing the gap from 224,000 to 300,000 will be extremely challenging. Industry analysis by the HBF and Savills suggests that reaching 270,000-280,000 by the end of the parliament is a more realistic expectation, which would still represent a transformative increase in housing delivery by historical standards.
Planning Reform: The Biggest Shake-Up in a Generation
Planning has long been identified as the single largest constraint on housing delivery in England. The system's complexity, the power of local objections, the resource shortfall in local planning departments, and the absence of meaningful consequences for under-delivery have combined to create a bottleneck that policy after policy has failed to unblock. The current government's approach is the most radical attempt at reform since the 2012 NPPF, and arguably since the 1947 Town and Country Planning Act.
NPPF Reforms: Mandatory Housing Targets
The revised National Planning Policy Framework, published in its final form in May 2025, reinstated mandatory housing targets for local planning authorities (LPAs). Under the previous Conservative government, these targets had been made advisory, allowing councils to set their own lower targets and giving communities effective veto power over development in many areas. The new NPPF reverses this approach comprehensively.
- Advisory housing targets
- Councils could set lower local targets
- Five-year land supply optional in some areas
- Community objections could block schemes
- No consequences for under-delivery
- "Plan-led" system favoured incumbents
- Mandatory housing targets based on local need
- Standard methodology with updated affordability weightings
- Five-year land supply requirement reinstated
- Presumption in favour of sustainable development strengthened
- Housing Delivery Test consequences tightened
- Grey belt policy unlocks previously protected sites
The new standard methodology for calculating housing need incorporates updated affordability ratios from the ONS, population projections, and a new "uplift" factor for areas with the greatest affordability pressures. This has resulted in significantly higher targets for many local authorities, particularly in the South East and East of England where the gap between house prices and local incomes is widest.
The Grey Belt Policy
Perhaps the most politically significant planning reform is the introduction of the "grey belt" concept. This classifies lower-quality Green Belt land — including disused petrol stations, car parks, scrubland, and other previously developed land that contributes little to the Green Belt's stated purposes — as suitable for housing development. The policy applies specific criteria: grey belt sites must be previously developed, poorly located for Green Belt purposes, or of low environmental value.
- Applies to land currently designated as Green Belt that meets specific low-quality criteria
- Does not apply to Areas of Outstanding Natural Beauty, Sites of Special Scientific Interest, or land with significant ecological value
- Developers must meet a new "golden rules" framework: 50% affordable housing, necessary infrastructure, and improved green spaces
- Estimated to unlock 200,000-350,000 potential plots across England over the next decade
- Most applicable in the Greater London fringe, West Midlands, and Greater Manchester conurbation
Planning and Infrastructure Bill
The Planning and Infrastructure Bill, which received Royal Assent in September 2025, goes beyond the NPPF to reform the institutional framework of planning in England. Its key provisions include:
| Provision | Description | Impact |
|---|---|---|
| New Development Corporations | Power to create development corporations for large-scale new communities and urban extensions | Enables new towns of 10,000+ homes with dedicated delivery agencies |
| Infrastructure Levy reform | New Infrastructure Levy to replace CIL and most S106 obligations on a phased basis | Simplifies developer contributions; aims to capture more land value uplift |
| Planning fees restructure | Ring-fenced planning fees to fund LPA capacity; national fee schedule updated | Addresses chronic underfunding of planning departments |
| Digital planning transformation | £100M investment in digital planning systems and standardised data formats | Faster application processing; improved transparency |
| Compulsory purchase reform | Updated CPO rules allowing land to be acquired closer to existing-use value | Reduces land cost for public-sector-led developments |
| Environmental outcomes framework | Streamlined environmental assessments replacing EU-derived EIA processes | Faster environmental clearance while maintaining protections |
Stamp Duty Changes and Buyer Impact
Stamp Duty Land Tax (SDLT) changes have been among the most immediately felt policy shifts for new build buyers. The temporary thresholds introduced during the pandemic were allowed to revert in April 2025, creating a significant fiscal event that reshaped transaction patterns across the market.
Impact on New Build Buyers: Cost Comparison
| Purchase Price | SDLT (FTB, Pre-Apr) | SDLT (FTB, Post-Apr) | Additional Cost |
|---|---|---|---|
| £250,000 | £0 | £0 | £0 |
| £300,000 | £0 | £0 | £0 |
| £350,000 | £0 | £2,500 | +£2,500 |
| £400,000 | £0 | £5,000 | +£5,000 |
| £450,000 | £1,250 | £7,500 | +£6,250 |
| £500,000 | £3,750 | £10,000 | +£6,250 |
The impact is most keenly felt by first-time buyers purchasing in the £300,000-£500,000 range — precisely the bracket that covers a large proportion of new build purchases in the South East, East of England, and commuter belt. An FTB buying a £400,000 new build now pays £5,000 in SDLT where they would have paid nothing under the previous thresholds. This has led several major developers to offer SDLT contribution incentives to offset the impact, particularly for first-time buyers.
Affordable Housing Policy
Affordable housing delivery has been given renewed priority and substantially increased funding. The government's approach operates on three interconnected fronts: increased Homes England grant funding, reformed planning requirements, and expanded delivery partnerships between the public and private sectors.
Affordable Housing Programme Priorities
The reformed Affordable Homes Programme places a clear emphasis on social rent, reversing the previous government's preference for shared ownership and affordable home ownership products. The government's position is that social rent delivers better value for public money and better meets the needs of households in acute housing need. The target tenure split for the new programme is:
For new build developers, the affordable housing policy environment creates both obligations and opportunities. The increased section 106 requirements on new developments — particularly the 50% affordable housing Golden Rule on grey belt sites — will affect scheme viability calculations. However, the expanded grant funding programme also means that housing association and local authority partners have more capital to invest, creating additional sales channels for developers through partnership agreements. Vistry Group's model, which delivers primarily through these partnerships, has proven highly successful and is being adopted by other developers including Countryside Partnerships and Keepmoat Homes.
Devolution and Regional Housing Powers
The devolution agenda is creating a new tier of housing decision-making in England. Combined authorities and elected mayors are being given expanded powers over strategic planning, housing investment, and land assembly. This has significant implications for how new build housing is planned and delivered at regional level.
| Combined Authority | Housing Target | Key Powers | Major Initiatives |
|---|---|---|---|
| Greater Manchester | 14,800/yr | Spatial framework, CPO, land assembly | Places for Everyone joint plan |
| West Midlands | 12,200/yr | Housing investment fund, brownfield regeneration | £500M brownfield fund |
| West Yorkshire | 9,600/yr | Strategic planning, housing infrastructure | Mass transit-linked development |
| South Yorkshire | 5,400/yr | Land assembly, strategic investment | Town centre regeneration programme |
| Liverpool City Region | 5,200/yr | Housing investment, brownfield focus | Brownfield first housing strategy |
| North East | 4,800/yr | Strategic planning framework | Green new deal housing programme |
The devolution model creates both opportunities and complexities for developers. On the positive side, combined authorities can take a more strategic view of housing need, coordinate infrastructure investment, and unlock sites that individual LPAs might resist. On the negative side, the additional layer of governance can add complexity and uncertainty to the planning process, particularly during the transition period as new spatial strategies are prepared and adopted.
Building Safety and Quality Regulation
The Building Safety Act 2022 continued to shape the new build market in 2025, with the new regulatory regime now fully operational. The Building Safety Regulator (BSR), established within the Health and Safety Executive, has assumed responsibility for building control on all higher-risk buildings (those over 18 metres or 7+ storeys), replacing the previous system where developers could choose between local authority and private approved inspector building control.
- Mandatory for all registered housebuilders
- Strengthened pre-purchase information requirements
- Independent New Homes Ombudsman for dispute resolution
- 2-year aftercare period with defined response standards
- Customer satisfaction reporting obligations
- BSR gateway process adds 8-16 weeks to HRB timelines
- Increased documentation and evidence requirements
- Mandatory principal designer and principal contractor roles
- Golden thread of building information throughout lifecycle
- Higher building control fees for HRB schemes
Energy and Net Zero Policies
Energy policy intersects directly with the new build market through the Future Homes Standard, but broader net zero policies are also shaping developer and buyer behaviour. The government has confirmed its commitment to reaching net zero by 2050 and has positioned housing as a critical enabler of this target.
- Future Homes Standard implementation from 2025
- No new gas boiler installations in new homes
- Mandatory EV charging points (already in force)
- Boiler Upgrade Scheme extended to 2028
- Solar PV strongly incentivised through SAP 10
- MVHR expected in most FHS homes
- Embodied carbon targets for new homes (by 2027)
- Whole-life carbon assessments in planning
- Green SDLT discount for EPC A homes
- Mandatory biodiversity net gain increased from 10%
- Water efficiency standards tightened to 100 l/p/d
- Overheating risk assessments for all orientations
Scotland, Wales, and Northern Ireland
While much of the policy discussion focuses on England, the devolved nations have their own distinct housing policy agendas that significantly affect the new build market in those regions.
- New Build Heat Standard banning gas boilers (2024)
- Rent controls in designated areas
- LBTT with lower thresholds than SDLT
- National Planning Framework 4 prioritising brownfield
- Housing to 2040 strategy
- LTT with different rates and bands
- Renting Homes (Wales) Act 2016 in force
- Second homes premium up to 300% council tax
- Planning Policy Wales Edition 12
- Ambitious social housing targets
- No stamp duty devolution (SDLT applies)
- Housing Supply Strategy 2022-2037
- Separate building regulations framework
- Northern Ireland Housing Executive reform
- Mixed tenure community development focus
What This Means for Buyers
The cumulative effect of these policy changes creates a more dynamic and, in many ways, more favourable environment for new build buyers — though with important caveats. Here is a practical summary of what the key policies mean for different buyer types.
Challenges: SDLT threshold reversion adds cost for purchases above £300K; competition from investors in some areas; Help to Buy not replaced with equivalent scheme.
Challenges: SDLT reversion to lower thresholds increases transaction costs; grey belt development may cause concern in some areas; chain dependency remains.
Challenges: 5% SDLT surcharge significantly increases upfront costs; potential future rent controls in some areas; EPC minimum standards for rental coming.
Challenges: FHS compliance costs; Infrastructure Levy uncertainty; grey belt affordable housing requirements; BSR process adds time for tall buildings.
Frequently Asked Questions
Looking Ahead: Policy Pipeline
Several significant policy developments are expected during 2026 that will further shape the new build market. These include the full operational rollout of the Infrastructure Levy (replacing CIL and S106 on a phased basis), potential SDLT reforms in the Spring Statement, the publication of embodied carbon consultation outcomes, and the first local plan reviews under the new mandatory target regime. The government has also signalled interest in reforming leasehold law further, which could affect the apartment sector.
For anyone involved in the new build market, staying informed about policy developments is more important than ever. The pace of change is rapid, the implications are far-reaching, and the interaction between different policy levers creates both opportunities and risks. Whether you are a buyer navigating development pipeline trends, an investor assessing returns, or a developer planning your next phase, understanding the policy landscape is essential to making informed decisions.