Planning approvals for new homes fall for the first time since 2011

New research from easyMoney, the investment platform from Sir Stelios Haji-Ioannou’s easy family of brands, shows the number of planning approvals given for new housing developments has fallen for the first time since 2011.

easyMoney says that the number of residential planning approvals hit a three year low in 2018, falling by 4% to 47,500 last year from 49,600 in 2017*. (see graph below).

easyMoney says that one of the main drivers behind the drop-off in the number of planning approvals for new homes is Brexit-related uncertainty. This uncertainty is leading to banks reducing their lending to property developers even further, forcing them to postpone new developments.

Further analysis of Bank of England data shows that the value of outstanding bank lending to property development businesses fell to just £14.5 billion in November 2018, down from a peak of £35.9 billion in November 2013**.

The decrease in planning approvals will concern the UK Government, which is under pressure to build more homes. In its 2017 Autumn Budget, the Government set a target of 300,000 new housing starts each year by the mid-2020s. However, just 199,880 houses commenced last year***.

Andrew de Candole, CEO of easyMoney, says:

“Britain desperately needs new homes – but developers don’t have the financial firepower to make it happen.

“Until Brexit is sorted and some certainty is provided, the funding from mainstream lenders required to get projects going is unlikely to start flowing.

“Developers have the land and the demand for homes is there, but the increasing lack of support from lenders is making it difficult to get projects moving.

“At easyMoney, we make carefully selected loans that support some of the best property UK developments that are available. We exercise extensive due diligence on all our loans, which has helped us to ensure that we’ve never lost money on a single loan.”