Government's housing targets at risk amid financing pressures, planning delays and skill shortages - London Business News | Londonlovesbusiness.com

"Almost all industry leaders surveyed reported "low" or "very low" confidence in the UK development market entering 2026, citing weak market sentiment, slower decision-making, and persistent economic uncertainty. The report also indicates that financing remains available, but on selective and more expensive terms, with many debt funds struggling to deploy capital due to a shortage of viable projects. Typical financing costs remain between 7-12% per annum, further undermining scheme viability."

"While planning applications rose by 6% year on year, approvals have fallen 11%, compounding the delivery bottleneck. Developers warn that Gateway 2 legislation alone adds an average of 26 weeks to planning processes, even though the backlog is expected to improve in early 2026. Local authority capacity constraints and the slow rollout of the new NPPF continue to restrict progress."

"Costs continue to erode deliverability Across the sector, rising costs of land, materials and labour remain a major barrier to new housing supply. These pressures, combined with housing affordability challenges (only 14% of properties in large towns and cities are affordable to single-income buyers), are threatening the viability of both market-sale and rental schemes. Skills shortages are intensifying The Development Index also identifies a growing skills gap as a critical threat to the Government's 2026"

Industry leaders express low or very low confidence entering 2026, citing weak market sentiment, slower decision-making and persistent economic uncertainty. Financing remains available but on selective, more expensive terms; many debt funds struggle to deploy capital because of a shortage of viable projects and typical financing costs of 7–12% per annum undermine scheme viability. Planning applications rose 6% year-on-year while approvals fell 11%, with Gateway 2 adding around 26 weeks to processes and local authority capacity and slow NPPF rollout restricting progress. Rising land, materials and labour costs and a widening skills gap further threaten the viability of market-sale and rental housing, and affordability is low.

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