The Office for Budget Responsibility’s (OBR) forecast of 1.5 million homes being built by the end of the decade are too optimistic, the Home Builders Federation (HBF) has said, with increased costs making many sites unviable.
In March, the OBR said planning reforms would bring housebuilding to its highest level in 40 years, and the government was ‘on track to build an extra 1.3 million homes by the end of this parliament’.
Further reforms, including the Planning and Infrastructure Bill, would also contribute to the 1.5 million target and grow the economy by 0.2% by 2029/30 (£6.8 billion) and 0.4% by 2034/35, the OBR said.
But according to the HBF, the forecast is unrealistic and unviable, and the organisation has written to the OBR to share its concerns. The letter was sent privately, but HBF told Today’s Conveyancer that cost increases and taxes make many sites unviable.
‘The OBR’s March 2025 forecasts for housing supply were ambitious and demonstrated the positive impact on the economy that building more new homes would have’, said HBF CEO Neil Jefferson.
“The numbers are achievable in the right policy environment. Whilst the planning reforms overseen by ministers last year are very positive, government also continues to oversee increases in policy costs and taxes on new homes making many sites unviable.
“We need to see a reversal of these additional burdens and action to support first-time buyers in a market that they are increasingly frozen out of. It is the first time in decades there is no government support scheme in place to help people buy a home and the supressed level of effective demand is preventing builders investing in sites to build the homes the country needs.”
Earlier this month, housing minister Steve Reed said he expected to be held accountable over the government’s homebuilding targets, saying his job should be on the line if he failed.
The comments were made during an interview with the BBC’s Panorama, in a programme which cast doubt on the government’s ability to meet its targets. To do so would require a 50% uplift on current volumes, Panorama’s investigation found, with an additional 100,000 homes needed per year over and above the 200,000 currently built.
Speaking to Panorama, Professor Paul Cheshire, Emeritus Professor at the London School of Economics and a previous adviser to the government on planning policy, said it would take years for the changes to planning policy to have an impact.
There was ‘no way’ the government would build 1.5m new homes by 2029, he added, describing it as like ‘turning a tanker round’ and stressing it will take time for any reforms to take effect.
