The UK government’s stated goal to build 1.5 million homes during the current parliamentary term underlines a strong political focus on addressing the housing shortage.
Forecasts from the Office for Budget Responsibility suggest that, if reforms stay on track, the UK could reach its highest housebuilding levels in over four decades by 2029/30.
The fact is, this policy commitment and the rising capital investment will bring more new-build homes and opportunities for brokers with potential buyers. Understanding the evolving landscape shaped by supply constraints, regulatory change, and emerging lending criteria will be essential.
Advisers should be in a position to hand-hold clients and raise awareness of the huge opportunities this will bring alongside the types of immediate challenges which can create friction for buyers, developers, and intermediaries alike.
The planning reforms already underway are a bid to overcome some of the most complex, administratively burdensome issues facing the housing sector. The key changes include the introduction of mandatory housing targets for local authorities and the digitisation of planning permissions via AI tool Extract.
These measures are intended to streamline planning permission decisions and unlock development on brownfield and under-utilised land. These changes which are currently going through Parliament in the Planning and Infrastructure Bill will eventually be absorbed into the National Planning Policy Framework.
Nevertheless, housing supply remains constrained by other factors, many of which are outside the control of local planning authorities.
CONSTRUCTION SECTOR CONSTRAINTS
At the same time, UK developers continue to contend with structural barriers that impact their ability to bring new homes to market. Material costs remain high due to global supply chain issues. Labour shortages are also a significant concern, with a shortage of skilled workers exacerbated by an aging workforce and lack of new entrants, as well as ongoing economic pressures.
Apprenticeship dropout rates are reportedly high and employers cite increased National Insurance contributions as an added strain.
These pressures have resulted in fewer completed homes and, in turn, constrained availability for new-build buyers. Coupled with a sharp 18% rise in new-build property prices between 2023 and 2024 due to the increased cost to build and the higher prices new build properties attract, affordability has become a central issue for many but particularly for first-time buyers.
Average upfront costs are now in the region of £27,000, so some prospective buyers are finding new-build options financially out of reach.
CHANGING BUYER SENTIMENT
While new-build may not appeal to everyone, the perceived lower value of older housing stock, the drive for carbon neutrality with all the environmental benefits, cost-savings and effective ‘green premium’ this brings may well convince many to reconsider.
From 2025, all new-build homes must meet Future Homes Standard requirements, making them zero carbon ready. These standards include the mandatory installation of heat pumps, enhanced insulation, and energy-efficient ventilation systems. The result will be a significant reduction in household carbon emissions of up to 80% compared to current averages and the potential for sharply reduced energy bills.
While these improvements are designed to enhance sustainability, they also present opportunities for lenders to update affordability models. Factoring in lower running costs may allow for more realistic and flexible income assessments. Some lenders are already exploring higher loan-to-income ratios and specific product innovation such as green mortgages and cashback incentives for energy-efficient homes.
THE ROLE OF LENDERS AND BROKERS
In the context of continued economic headwinds, brokers will always value consistency and reliability in lender service standards. Pre-site valuations can help speed up mortgage processing, while clear, transparent criteria for builder incentives and warranty schemes can support better application outcomes.
At Bank of Ireland for Intermediaries, for instance, we include assessment and valuation from day one, up to 5% builder incentives are considered, there are soft credit footprints at AIP stage, and a straightforward process for case-tracking and document submission.
Our product flexibility, combined with extended offer validity of up to 15 months in total, ensures brokers and buyers are supported through longer development timelines.
For brokers, staying up to date with policy changes, lender criteria, and regulatory updates will be vital. As energy efficiency becomes an increasingly prominent feature of affordability assessments, they may find themselves spending more time helping clients understand how sustainable features translate into long-term cost savings.
Equally, brokers may need to work harder to manage expectations around property size, quality, and cost, particularly for younger buyers with limited savings.
WHAT TO WATCH
The outlook for the next six to 12 months includes a continued focus on planning reform implementation and delivery of the Government’s Affordable Homes Programme. The latter brings with it £39 billion of funding, with a strong focus on social rent housing.
Demand recovery is likely to be gradual, tied closely to improvements in affordability, wider economic stability and consumer confidence. Nonetheless, the foundation for future growth is being laid. For brokers, the ability to adapt, inform, and advise will be more important than ever.
