Budget 2025: What does this really mean for our sector?
Yesterday’s Budget offered some important confirmations for the housing industry while highlighting just how constrained the sector remains.
Landfill Tax: Major risk removed, though cost pressures persist
The government will not introduce a single rate for landfill tax. Stepping back from this proposal removes a significant threat to remediation-heavy sites and avoids a cost shock that would have made many schemes unviable.
Nonetheless, landfill tax rates are due to rise, which will place additional strain on already tight appraisals. While the retained exemptions for quarry backfill and permitted sites, along with targeted funding to unlock stalled land, provide some relief – they do not materially shift deliverability at a sector-wide level.
Planning Capacity: Movement, although still limited
Additional investment in planning and environmental regulators, alongside a commitment to expand Planner recruitment, should ease some of the system’s existing pressures. These changes are expected to improve responsiveness and reduce administrative friction, however, given the complexity of current policy and the scale of the national pipeline, the overall impact will be incremental rather than transformative.
Across the developers we work with a consistent theme stands out. Capacity only becomes meaningful when the right skills are in place. The expertise within planning teams, in both public and private sectors, is increasingly determining whether schemes progress efficiently or not.
Viability under sustained pressure
New tax changes, combined with already high build costs, tightening regulatory obligations and challenging financing conditions, continue to place extensive pressure on scheme viability.
Ambition across the sector is growing, yet the underlying economics remain strained. As a result, more projects are being pushed to the limits, with economic feasibility being a major constraint.
Demand & Delivery: Still out of alignment
Forecasts for net additions continue to fall well below stated housing targets, underscoring the persistent gap between ambition and deliverability. In the absence of meaningful support for first-time buyers and with mortgage affordability still being tough, private housing sales rates remain lacklustre.
This impact is most acute for SME housebuilders, whose delivery models rely on steady sales rates to maintain momentum. Without more substantial buyer confidence and improved access to finance, the gap between what is planned and what is built is likely to deepen.
The broader economic context matters
This Budget arrives amid higher borrowing costs, cautious lenders, limited local authority resources and subdued productivity, all of which significantly influence housing delivery. Without greater alignment across these areas, growth will continue to be stifled.
