Planning reform will not unlock land supply unless viability improves

This is the consistent view across the Carter Jonas’ Development team, which works across all UK field land, greenfield land and strategic land. A survey drawing on that breadth of experience provides a regions on major residential, SME housing, mixed-use schemes, urban regeneration, brown useful snapshot of what those closest to land transactions are seeing in the market.

‘The difficulty is that the answer will not be found in planning policy alone’, surmises James Bainbridge of Oxford, Chairman of Carter Jonas. ‘Higher housing targets, grey belt policy, planning fee reform, committee reform and a stronger presumption in favour of delivery may create more opportunities for consent. But land still has to transact, and a permission does not become a home unless a buyer can make the numbers work and a landowner is prepared to sell at a value the market can sustain’.

Policy has shifted ahead of land transactions

Since July 2024, the policy environment has become more supportive of housing delivery. Half of those responding to the survey said that policy change had made a tangible difference to residential land transactions, partly in boosting sentiment.

At first glance, this may seem surprising. With a significant programme of planning reform either already introduced or close to implementation, one might have expected a more positive response.

That figure might have been higher had we asked the same question of planning consultants. For development consultants, however, reform is yet to convert into land-market confidence.

But sentiment is not the same as deliverability. 87.5% of respondents said the residential land market in their region feels weaker. A respondent whose work is focused on London urban regeneration, major residential and mixed-use brownfield schemes, described it as polarised, with some sites strong and others weak. This demonstrates a highly nuanced market: policy has created some opportunities, but it has not removed the commercial test.

A weaker but still active market

Overall, the survey depicts a selective market. The majority of respondents reported fewer residential land launches since July 2024. On achieved values, 75% said residential land values had decreased, one said they had stayed broadly flat, and one said they had become more variable site by site.

The buyer picture is similarly cautious, and it is best viewed by buyer type. While half of respondents reported fewer enquiries from housebuilders, a larger proportion reported fewer enquiries from SMEs. More than half reported fewer bids from volume housebuilders, while half reported fewer completed purchases; SMEs fared similarly.

This points to a funnel that has narrowed from the start: fewer launches are meeting more cautious buyers and that caution is then being reinforced as schemes move from enquiry to bid to completion.

James Staveley, who works across major residential, SME housing and mixed-use brownfield schemes in London, summed up the mood as ‘cautious’. His explanation was that there is demand for well-located sites, but land prices need to reflect where build costs and demand now stand.

The expectation gap between landowners and buyers

The most striking finding is the gap between seller expectations and achieved values.

62.5% of respondents said landowner price expectations had stayed broadly flat since July 2024, 25% said they had decreased and 12.5% said they had become more variable. Yet 62.5% said achieved land values had decreased. That is the tension at the heart of the market.

If landowners are largely holding expectations while achieved values are falling, the problem is not demand but pricing. Land is available, buyers are present and policy is increasingly supportive, but the deal will not be complete unless the parties can agree a value which reflects current costs, sales rates, finance conditions and risk.

The factors driving expectations are also revealing. All respondents selected house prices and sales rates as drivers of expectations and 75% also selected build costs. Planning confidence remains a concern for 25%. So, policy matters, but the dominant drivers are commercial.

The same pattern appears in the guide price and bid gap. Half of respondents said the gap had stayed broadly the same, but when asked what could close the gap, changes in build costs ranked most highly, followed by affordable housing expectations and changes in sales values.

This shows the fragile nature of land supply: a site may have planning potential, but it is not truly available for delivery unless it is priced on terms that allow a viable scheme to proceed.

Viability as an early consideration

A key finding of the research is that viability is no longer a factor only at the planning application stage or in late negotiations over planning obligations: it is increasingly moving into the structure of the land deal itself.

While Carter Jonas would generally advise that viability is an early consideration, clearly, this now extends beyond best practice. A majority of respondents reported that residential land deals now involve more conditionality around planning, technical matters or funding.

Conditionality, deferred payments, overage, and review mechanisms are effective in managing uncertainty. They allow buyers and sellers to keep talking, but they also show that neither side is comfortable carrying too much risk at the outset.

James Bainbridge, who works on major residential strategic and immediate development land, said the market felt ‘stuck’, citing a lack of government support and identifying local plan progress and allocations as the factor which had worsened deal certainty. The need to adjust deal terms to keep a transaction alive was demonstrated by Jon Pinkerton in London, who referred to a land deal in Buckinghamshire where the sale had to be restructured because the developer lacked a Registered Provider partner and therefore could not proceed.

Why deals are taking longer

The research also explored why the period between offer accepted and heads of terms agreed is becoming more difficult.

Reasons included delays in legal drafting, negotiation on overage or review mechanisms, technical due diligence, planning risk appraisal, viability, affordable housing assumptions, and utilities capacity and programme.

This is typical of a more cautious market: buyers are not only asking whether they want a site; they are asking whether consent is deliverable, whether the utilities programme works, whether the affordable housing assumptions are credible and whether the structure protects them if the market moves again.

Policy has helped sentiment, but not yet delivery

Respondents unanimously selected build costs and contractor capacity as reasons for market weakness or polarisation. A strong majority also selected house price and sales market confidence, affordable housing expectations and viability.

Asked to identify the main constraint today, build cost volatility ranked highest, followed by sales market confidence. Interestingly, planning policy was not selected as a main constraint, although planning still appears throughout the survey as a risk factor, a source of delay and an area where clarity can improve certainty.

Half of respondents said planning policy clarity was the area where deal certainty had improved most since July 2024, but an equal number said nothing had improved materially.

While the policy environment may now be more supportive of development, the transactional market still needs viability, infrastructure and planning certainty before supply can move materially.

The future role of reform

The most constructive answers came in response to what would unlock residential land supply over the remainder of this Parliament. 37.5% called for faster planning progress and 25% selected infrastructure delivery. Others cited sales confidence, clearer affordable housing expectations, and demand-side stimulus, including stamp duty reform or a Help to Buy-style scheme.

Richard Lundy, based in London pointed to the pressure on buyer demand from mortgage rates, energy costs and the cost of living, noting that weaker purchaser affordability feeds directly into developer caution. Edward Walter in Oxford, whose work spans major residential, SME housing, urban regeneration, strategic land and immediate development land, described the market as cautious because of fluctuating sales rates and build rates. James Staveley argued that demand-side stimulus would help, but also that agents and landowners need to be realistic in their value expectations.

Faster planning, infrastructure delivery and clearer affordable housing expectations all matter. But so does realism at the point of transaction: if land values do not reflect current build costs, sales rates, finance and risk, planning reform will create more theoretical capacity than real supply.

Land supply depends on realism

Few would disagree that the Government is right to focus on planning reform. Without a planning system capable of releasing land and determining applications faster, the housing target will remain out of reach.

But our survey shows that the next test lies in the land market. Planning reform may increase the number of sites with a route through the system, but it will not unlock land supply unless those sites can be priced, funded and structured in a way that reflects today’s market.

For landowners, that means understanding where buyer appraisals now sit, and for buyers, it means identifying risk early and being clear about the structure needed to manage it. Public bodies need to align planning ambition with infrastructure, affordable housing expectations, and the practical economics of delivery. The challenge now is to turn policy opportunity into transactions that can withstand proper scrutiny.