The big picture
The government has committed to building 1.5 million new homes over the parliamentary term. To achieve this, the planning system is undergoing its most significant reform since the Town and Country Planning Act 1990. For property developers, this creates both opportunities and uncertainties.
Key changes
Mandatory housing targets
Local authorities now have mandatory housing targets based on a new Standard Method calculation. Unlike the previous advisory targets, these are binding — councils that fail to maintain a 5-year housing land supply face the "presumption in favour of sustainable development," making it harder to refuse planning applications.
For developers, this means sites in areas with housing shortfalls are more likely to get planning permission, especially if the council can't demonstrate an adequate land supply.
Grey belt release
The new grey belt category identifies Green Belt land that is previously developed or doesn't strongly serve Green Belt purposes. Councils that can't meet housing targets through brownfield alone must now review their Green Belt and release grey belt sites. This is opening up development opportunities in areas that were previously completely restricted.
Grey belt sites that receive allocation or planning are particularly attractive to lenders because they combine policy support with typically strong locations (Green Belt areas tend to have high property values).
NPPF presumption in favour
The revised NPPF strengthens the presumption in favour of sustainable development. In practice, this means planning committees need stronger reasons to refuse applications that comply with local and national policy. For developers, well-designed schemes on appropriate sites have a better chance of approval than under the previous framework.
Infrastructure Levy (coming)
The planned Infrastructure Levy will eventually replace both CIL and Section 106 with a single, nationally set levy based on the value of completed development. This is still being developed and won't be fully implemented for several years, but developers should be aware that the cost of infrastructure contributions may change.
Impact on development finance
- More fundable sites: Grey belt release and the stronger presumption in favour of development increase the supply of sites with planning certainty — which is what lenders need to see.
- Land values adjusting: As new sites become available, land prices in some areas may moderate — improving development economics for sites that weren't previously in the market.
- Increased lender appetite: Policy certainty and government commitment to housebuilding give lenders confidence that the market will be supported. This translates to more competitive terms.
- Affordable housing obligations: Grey belt sites typically require 50% affordable housing. Factor this into your appraisal — it significantly affects GDV and profit margins.
What to do now
If you're considering sites in areas with housing shortfalls or near Green Belt boundaries, now is the time to research grey belt opportunities. Upload your deal to Assesr — even at pre-planning stage — and the AI will flag how planning reform affects your specific deal's fundability.