Key takeaways for housing sector in a ‘budget for benefit street’

At Archor development is our ‘thing’. And so we took a keen interest in the what the Chancellor had to say in her November Budget, and how those announcements could affect development projects moving forward.

As the dust begins to settle in the wake of the Budget, it is clear that although housing was certainly not the focus, there are nevertheless a number of key takeaways for the sector – including that the OBR has now revised down its forecast of the number of new homes to be delivered during this Parliament.

Labour originally pledged to deliver 1.5million homes in England alone between 2024-25 and 2029-30, however, is anticipated to miss that. The OBR now expects only 1.49million homes to be delivered across the whole of the UK during the same period.

Despite this disappointing forecast, the Budget included some key takeaways which could yet provide some glimmers of hope for the housing sector as we move into 2026.

Devolution of Funding

In line with the Government’s ‘Plan for Change’ introduced in June this year, the Chancellor announced that a quarter of the National Housing Delivery Fund, set to launch next spring, will be devolved.  With the Government keen to ensure that “money and power [is put] in the hands of local and regional leaders”; around £1.3bn of the funding pot will now go to mayoral strategic authorities through the integrated settlement.

• More funding for regeneration outside of London is another element of the Government’s devolution drive. In particular:
• £902million in funding over four years will be provided to mayors in the 11 areas of the North and Midlands with the most growth potential;
• A new £500million Mayoral Revolving Growth Fund will allow mayors in the same regions to invest in growth projects alongside the private sector; and
• Starting from February 2026, mayoral strategic authorities will be able to bid for (and set priorities for) around a fifth of the new Social and Affordable Homes Programme, established with the intent of providing up to £39billion in funding, and delivering up to 300,000 new homes over the next 10 years.

More Planners

With planning applications for new homes at a record low, and 100,000s of planned homes stuck in the planning system, housing delivery is also hampered by delays in this system.

In an effort to combat this, the Chancellor also announced a £48million recruitment drive in the planning sector – with the aim of bringing 350 new planners into the system.

While this is encouraging, the fact that so many homes are stuck in the planning system shows that the planning process is extremely complex, and so we will have to wait to see how effective the introduction of new, potentially inexperienced planners will be.

Conclusion

Prior to the Budget, it was reported that the overall construction spend in the UK was contracting across housing and other sectors, and Bank of England research suggested that employment was falling as well.

What impact the Budget and new funding streams announced will have on the housing sector of course remain to be seen. However, at least the pre- Budget uncertainty has now ended, which may unlock some transactions. And to end on some positivity, real world data from the Office for National Statistics suggests that construction output figures are slightly above what had been expected.