In her Spring budget, Chancellor Rachel Reeves revealed that the Government expects to undershoot its manifesto target of 1.5 million homes in five years, estimating there will be fewer than 1.3 million “cumulative net additions to the UK housing stock“ between now and March 2030.
Reeves confirmed the official forecast of 1.3 million new homes UK from the Office for Budget Responsibility’s March 2025 ‘Economic and Fiscal Outlook.’ In the 2024 Labour Election Labour promised 1.5 million new homes in England in the period, but Reeves claimed the estimate was “within touching distance” of the Manifesto target.
The OBR, in a report centred on the growth impact of building new homes, said that following a ‘12 year low’ in net additions in 2025/26 with its prediction of 305,000 additions a year “by the end of the decade.” The OBR said: “From 2025-26 to 2029-30, we project around 1.3 million cumulative net additions to the housing stock.” Reeves said this would be a ‘40 year-high’ rate of delivery.
Reeves said housebuilding was “one of the central planks of our plan for growth. ” Planning reforms in December reintroduced mandatory local housing targets, and brought a new concept of ‘grey belt’ for developing previously green belt land into play. The Planning and Infrastructure Bill is currently undergoing its second reading in the House of Commons. The OBR concluded that the resulting planned housebuilding would “permanently increase the level of real GDP,” said Reeves, confirming the OBR’s estimate of 0.2% by 2029-30, contributing £6.8bn to the economy.
Reeves hailed this modest-sounding percentage increase as “the biggest positive growth impact that the OBR have ever reflected in their forecast, for a policy with no fiscal cost.”
Earlier in the week, the Government announced a further £2bn of investment in social and affordable homes for 2026, which was planned to deliver 18,000 new homes. In addition, the Education Secretary announced a £600m scheme “to train up 60,000 more construction workers, including 10 new Technical Excellence colleges,” said Reeves.
The OBR says revisions announced to the National Planning Policy Framework (NPPF) “will increase net additions by 170,000 across the forecast period, equivalent to a 0.5% increase in the housing stock in 2029-30.” This was “driven mainly by requirements for local authorities to release land to meet development needs as well as the strengthened presumption in favour of sustainable development.” Most of the increase, it said, would “take place from 2027-28 with time needed for developers to find sites, and local authorities to bring forward local plans, given the “capacity constraints in the sector.”
The OBR did however caveat its estimate 0f 1.3 million heavily: “There are several significant uncertainties around this estimate. For instance, capacity constraints in the house-building sector could prove more binding than assumed if, for example, growing demands on a limited construction workforce hinder housebuilders’ ability to deliver a rapid acceleration in the flow of new houses.”
In addition, “local opposition to reforms could prevent or delay housebuilding by more than we have assumed, particularly given much of the additional development in the next five years is assumed to take place on current green belt land.” said the OBR.