New building regulations will boost market activity
The British government is launching an initiative to stimulate the real estate market. The program includes new building regulations aimed at supporting small developers. These changes will primarily affect projects with up to 49 residential units.
Previously, the government set an ambitious goal of building 1.5 million new homes. The government hoped that this would curb price growth and increase the availability of housing for purchase and rent. However, the relevant ministry later acknowledged that this goal was virtually impossible to achieve under current market conditions. One way the authorities decided to provide support was by introducing new building regulations.
Problems in the construction sector
It bears noting that the volume of real estate construction declined at the fastest rate since 2020 in 2025. The following factors are putting pressure on the sector:
– increased interest rates;
– a shortage of qualified personnel to review applications;
– a complex and lengthy procedure for assessing the environmental impact of construction.
The shortage of specialists involved in the approval of construction projects is particularly acute. The decline in private-sector activity is also putting pressure on the sector. In 2024, the number of projects completed by private developers reached its lowest level in eight years. This trend is nothing new for the UK, where housing construction activity has been steadily declining since the 1960s.
Overview of the new building rules
The government hopes the innovations will increase housing construction. The program provides a simplified permit process. This procedure will apply to projects with up to nine residential units. Developers implementing projects with 10 to 49 houses can expect reduced costs. This benefit applies to costs associated with planning and coordinating work.
Additionally, the government has allocated financial support to developers:
– £100 million has been allocated to accelerate the implementation of small projects;
– £10 million has been allocated to hire specialists to conduct environmental assessments;
– and £1.2 million has been allocated to an innovation fund aimed at increasing construction efficiency.
The government is focusing on attracting private investment to the sector. To this end, government loans and other incentives will be available. These measures aim to attract £9.6 billion to the construction sector. These investments will speed up project implementation, increase construction volumes, and create new jobs in the industry.
This initiative includes an affordable housing program with £39 billion allocated over ten years.
It is too early to assess the program’s success. However, surveys of developers indicate signs of market recovery. Respondents note that obtaining building permits has become easier.