The government has delivered its biggest overhaul of planning law since the Localism Act of 2011. The Planning and Infrastructure Act received Royal Assent on 18 December 2025. A new draft National Planning Policy Framework is out for consultation. Yet planning approvals just hit their lowest level since 2012, and construction output is actively declining. Here's what's actually changed, what it means, and when any of it will make a difference.
First, the reality check. The Home Builders Federation's Q3 2025 Housing Pipeline Report, released in December, showed 45,075 residential units approved — the lowest quarterly total since Q2 2012. That's 34% down on the same period last year. For the first nine months of 2025, approvals were 25% lower than 2024.
London was hit hardest: approvals fell 49% quarter-on-quarter and 72% year-on-year. Just 910 projects were approved in the capital over the past 12 months — the lowest since records began.
Meanwhile, ONS data for November 2025 showed construction output falling 1.1% over the preceding three months — the largest decline since March 2023. The private housing repair and maintenance sector dropped 3.7%.
This is the starting point. The government is reforming a system that is, right now, going backwards.
Two major pieces of policy landed within 24 hours of each other on 18 December 2025: the Planning and Infrastructure Act received Royal Assent (meaning it's now law), and a new draft National Planning Policy Framework was published for consultation (closing 10 March 2026).
Together, they rewrite the rulebook. But most of the changes won't take effect until late 2026 or beyond.
Environmental Delivery Plans: A new system allowing developers to pay into a central fund instead of solving environmental mitigation individually. Natural England will use pooled payments to deliver habitat restoration at scale.
Spatial Development Strategies: Combined authorities and upper-tier councils must now prepare strategic plans covering housing, infrastructure and growth locations across their area.
Faster infrastructure approvals: Pre-application consultation requirements removed for nationally significant projects. Legal challenges restricted to a single attempt.
Local authority fees: Councils can now set their own planning fees to cover the true cost of processing applications.
If you want to build homes near certain rivers, lakes or wetlands — like the Solent, Somerset Levels, or parts of the Tees — you currently have to prove your development won't add pollutants that damage protected habitats. This is called "nutrient neutrality" and it has blocked tens of thousands of homes across England.
Under the current system, each developer must find their own solution: buying credits, building wetlands, or negotiating with water companies. It's expensive, slow, and often impossible to resolve at the scale of a single scheme.
Environmental Delivery Plans (EDPs) offer an alternative. Instead of solving the problem individually, developers can pay into the Nature Restoration Fund. Natural England pools the money and delivers bigger, more effective environmental projects — cleaning rivers, restoring wetlands — at a scale that individual schemes can't match.
The first EDPs will target nutrient-affected catchments. Natural England expects to have them operational by summer 2026. For developers with stalled schemes in affected areas, this could finally provide a route through.
Green Belt land around cities is protected to prevent urban sprawl. But much of it isn't actually green or valuable — car parks, scrubland, disused sites. Councils have been reluctant to release any of it for housing because "Green Belt" sounds sacrosanct, regardless of what the land actually looks like.
The government has created a new category: "grey belt" — the lower-quality parts of Green Belt that don't really serve the original purpose. The idea is to make it politically easier to release this land for housing, with conditions attached (affordable housing requirements, infrastructure contributions).
The catch? The House of Lords Built Environment Committee called the policy "largely redundant" because councils could already release Green Belt through local plan reviews. The real question is whether grey belt makes it easier to get speculative applications approved before councils update their plans — and the answer is probably "marginally, but don't bet on it."
The December 2025 draft NPPF refines the grey belt definition and provides clearer guidance, but the fundamental constraint remains: this is about making release more acceptable, not mandatory.
After Grenfell, any residential building over 18 metres (roughly 7+ storeys) needs approval from the Building Safety Regulator before construction can start. This checkpoint is called "Gateway 2."
The BSR was massively under-resourced. Approvals that should take 12 weeks were taking 40+ weeks. Thousands of homes were stuck. Student accommodation projects missed academic years. London — which relies heavily on apartment development — was hit hardest.
This is now improving. The government overhauled the BSR in mid-2025, creating a new "Innovation Unit" to fast-track applications. In Q4 2025, the regulator made over 700 decisions — the highest quarter since it started operating. The legacy backlog of 91 applications (covering 21,745 units) is projected to be cleared by early 2026.
The BSR becomes an independent body under the Ministry of Housing from 27 January 2026. One less excuse for delay.
The new cost: from October 2026, developers of 10+ unit schemes will pay a Building Safety Levy to fund remediation of dangerous cladding on existing buildings. Another item for the appraisal.
Housing need doesn't respect council boundaries. Major infrastructure — transport, utilities, green space — needs planning across wider areas. But since regional strategies were scrapped in 2010, each council has made its own local plan with no requirement to coordinate with neighbours.
The Planning and Infrastructure Act reintroduces strategic planning. Combined authorities and upper-tier councils must now prepare Spatial Development Strategies covering their whole area. These will set housing targets, identify growth locations, and ensure infrastructure is planned alongside homes.
This is slow-burn stuff. The government wants full coverage by 2029. It won't affect schemes in the pipeline now, but it changes the landscape for medium-term land strategy. If you're thinking about site acquisition in combined authority areas, the SDS process is worth tracking.
When developers argue a scheme "isn't viable" with full affordable housing or infrastructure contributions, they can negotiate these obligations down. This has been widely gamed — developers buy land at inflated prices, then plead viability to reduce what they deliver.
The new draft NPPF proposes standardised inputs and tighter rules on benchmark land value. Translation: less room to overpay for land and then claw back costs by cutting affordable housing. Developers will need to price in full policy costs from day one. The "we'll negotiate later" approach is getting harder to sustain.
| Date | What happens |
|---|---|
| 27 January 2026 | BSR becomes independent body under MHCLG |
| 10 March 2026 | NPPF consultation closes |
| Spring 2026 | Green Belt reviews expected to emerge from funded councils |
| May 2026 | Mayoral elections in six devolution priority areas |
| Summer 2026 | First Environmental Delivery Plans operational (nutrient catchments) |
| October 2026 | Building Safety Levy takes effect |
| Late 2026 / early 2027 | First EDPs for broader environmental impacts expected |
| 2029 | Government target for full Spatial Development Strategy coverage |
The reforms are real, but so is the implementation lag. 2026 will be spent setting up the new systems — writing Environmental Delivery Plans, establishing strategic planning boards, transitioning the BSR — while approvals and output continue to slide.
For developers appraising schemes now:
Nutrient-affected sites: If your scheme is blocked by nutrient neutrality, watch the EDP rollout closely. Summer 2026 could provide a route through that didn't exist before.
High-rise residential: BSR delays are improving materially. Factor in the Building Safety Levy from October 2026, but don't assume the 40-week approval times of 2024-25.
Viability assumptions: Build in full policy costs from day one. The negotiation-down approach is getting squeezed.
Programme assumptions: The planning system is still under pressure. Local authority capacity hasn't magically increased. Build realistic timelines — the reforms help at the margins, but 2026 won't feel dramatically faster than 2025.
Analysis compiled January 2026 using official government publications, ONS construction output data (November 2025), HBF Housing Pipeline Report (Q3 2025), and parliamentary records. Sources: UK Parliament, GOV.UK, Office for National Statistics, Home Builders Federation, Natural England.
Based on the Planning and Infrastructure Act 2025 and the draft NPPF consultation, here are the key questions SME developers are asking about what these reforms mean for their projects.
Not in 2026 — realistically, late 2026 at the earliest for marginal improvements, with meaningful change more likely in 2027. The Planning and Infrastructure Act is now law, but implementation requires Environmental Delivery Plans to be written (summer 2026 for nutrient catchments), strategic planning boards to be established, and councils to update local plans. Local authority capacity hasn't increased, and Q3 2025 approvals hit their lowest level since 2012. Build your programme assumptions on 2025 timelines; treat any acceleration as upside rather than baseline.
Only if your site is blocked by nutrient neutrality. If you're appraising a scheme in a nutrient-affected catchment — the Solent, Somerset Levels, parts of the Tees — the EDP rollout in summer 2026 could provide a route through that didn't previously exist. For sites outside these areas, EDPs for broader environmental impacts won't arrive until late 2026 or early 2027. Factor them into your watch list, not your base case appraisal.
Probably not materially. The House of Lords Built Environment Committee called grey belt policy 'largely redundant' because councils could already release Green Belt land through local plan reviews. Grey belt makes release more politically acceptable, not mandatory. The December 2025 draft NPPF provides clearer guidance, but the fundamental constraint remains council willingness. If you're banking on grey belt for a speculative application, the honest answer is: marginally helpful, but don't bet your appraisal on it.
Price in full policy costs from day one. The draft NPPF proposes standardised inputs and tighter rules on benchmark land value, specifically targeting the practice of overpaying for land then negotiating down affordable housing and infrastructure contributions. The 'we'll negotiate later' approach is getting squeezed.
If your appraisal relies on viability negotiations to make the numbers work, stress-test it with full policy compliance — that's increasingly the baseline expectation.