Rules-based planning: homes approved as of right

From April 2028, England moves to a rules-based planning system: every local plan sets binding zoning codes for use, height and density, and any housing scheme that complies is granted permission automatically within 8 weeks, without a discretionary committee decision. The aim is to raise housebuilding from about 220,000 to 300,000 homes a year by 2031.

From April 2028 England would replace discretionary planning decisions with binding local zoning codes, so housing schemes that comply would be permitted automatically within eight weeks, adding ≈23,000 homes a year above the baseline by 2031. The 300,000-homes ambition is already broadly in the OBR March 2025 baseline, where the December 2024 planning reforms take net additions to ≈305,000 by 2029-30. Only what zoning plausibly adds on top is therefore scored: ≈6,000, 16,000 and 23,000 extra net additions in 2029, 2030 and 2031. The levers are housing starts and completions (PEHS, PEHC), private dwellings investment (IH) with total investment (IF) moved in step, judgement shifts to house prices (APH) and trend output (TRGDP), and ≈£0.3bn of new-burdens funding through government consumption (CGGPSPSF, with CGGPS in step); each shock entry is a cumulative step added to earlier entries for the same variable, with IH and IF in £m a quarter at ≈2028 prices, PEHS and PEHC in dwellings a quarter, and APH and TRGDP as % level shifts.

### Interpretation From April 2028 England would move from a discretionary, case-by-case planning system to a rules-based one. Every local plan would set binding zoning codes for use, height and density, and any housing scheme that complies would be granted permission automatically within eight weeks, with no committee vote. The stated goal is to lift housebuilding from ≈220,000 to 300,000 homes a year by 2031. That goal is already broadly in the counterfactual. The OBR's March 2025 forecast assumed the December 2024 National Planning Policy Framework reforms would lift net additions to ≈305,000 in 2029-30, adding ≈0.2% to the level of GDP. The roll-forward holds net additions at ≈300,000 in 2030-31. Scoring the full 80,000 rise would double count the baseline. The costing therefore scores only what zoning plausibly adds on top: ≈6,000 extra net additions in 2029, ≈16,000 in 2030 and ≈23,000 in 2031. There is no net effect in 2028, when codes are still being adopted and early fast-track approvals are offset by transitional disruption. The reform is a regulatory change rather than a tax or spending lever, so it enters the model through housing supply and investment. Private enterprise housing starts (PEHS) and private enterprise housing completions (PEHC) are raised. These feed net additions to the housing stock (NETAD) and the total housing stock (HSALL). The investment counterpart is private sector investment in dwellings (IH). The published model holds total gross fixed capital formation (IF) exogenous and derives business investment (IBUS) as a residual. IF is therefore raised in step, so the housing boom is not mis-recorded as a fall in business investment. Two judgement shifts complete the picture. Average house price (APH) is lowered as supply rises. Trend output (TRGDP) is raised because the constraint being relaxed limits productive capacity, not just demand. A small rise in general government final consumption (CGGPSPSF), with CGGPS moved in step, funds planning authorities to draw up the codes. If zoning added nothing beyond the baseline reforms, the impulse would collapse to the implementation cost alone. Equally, if the baseline uplift fails to materialise, zoning's real-world contribution could be larger than scored here. That is a judgement about the baseline rather than an effect of this policy. ### How it works through the OBR model 1. **Faster, rule-based permissions lift housing starts first.** Under a binding code, a compliant scheme no longer waits a year or more for a committee decision or faces the risk of refusal and appeal, so builders can bring forward sites they would otherwise have held back. PEHS is raised by ≈1,500 a quarter from 2028Q3 and by ≈3,800 a quarter from 2029Q3, roughly 8% above the baseline pace. The increment is modest next to the headline target because the baseline already assumes a much more permissive system. Zoning mainly strips out residual refusals, delay and planning risk; after that, the binding constraints become build-out rates (how fast homes can be sold without cutting prices) and the supply of skilled construction labour. 2. **Completions follow with a lag and add to the housing stock.** PEHC rises by ≈1,000 a quarter in 2029, ≈2,650 in 2030 and ≈3,800 in 2031. The model identity NETAD = 1.5166 × PEHC / 1000 grosses private completions up to all net additions, giving ≈6,000, 16,000 and 23,000 extra homes a year. HSALL is therefore ≈45,000 homes (≈0.15%) higher by the end of 2031. The 18 months or so from permission through start to completion is why the policy delivers almost nothing in 2028 and builds through the horizon. 3. **Housing investment is the main demand impulse.** IH records building work done, so it leads completions. Each extra home embodies ≈£230,000 of construction by 2030 (excluding land, which is not investment), so gross extra housebuilding reaches ≈£5.5bn a year by 2031. A quarter of this is assumed to displace other construction, because bricklayers and site managers are already scarce: 20 points come from improvements and other dwellings work, and 5 points from commercial structures. Net IH therefore rises by ≈£2.1bn in 2029, £3.6bn in 2030 and £4.4bn in 2031 in cash terms, about 3% of baseline dwellings investment by the end. Because IBUS = IF − GGI − PCIH − PCLEB − IH − IPRL in the published model, IF is lifted by the same amount plus two small increments: one for public corporation dwellings investment (PCIH), which moves in proportion to IH, and one for the business-investment response in step 5. Otherwise the identity would wrongly book the housing boom as a slump in business investment. 4. **Output rises by a little over a tenth of a per cent.** About 80% of housebuilding spending stays in the UK. The model's import weight for investment, used to build investment weighted by its import content (MIF = 0.234 × IF), is a touch higher than for housebuilding, which relies mainly on domestic labour, bricks and aggregates. Real GDP (GDPM) is held exogenous in the published model, so it is set consistent with the expenditure components: ≈0.05% higher in 2029, 0.09% in 2030 and 0.11% by the end of 2031, or ≈£4bn in cash terms. Following the OBR's own treatment of the 2024 planning reforms, most of this is treated as extra productive capacity rather than demand overshooting supply. TRGDP is raised by ≈0.09% by 2031, so the output gap (GAP = 100 × GDPM / TRGDP − 100) moves by no more than ≈0.02pp. The reform removes a regulatory brake, so labour and capital held back by refusals and delay can be put to work, and each finished home then adds permanently to the flow of housing services that GDP measures. 5. **Business investment gets a small accelerator lift.** Higher output raises market-sector gross value added (MSGVA) by ≈0.14% by 2031. The desired capital stock (KSTAR = exp(log MSGVA − 0.4 × log COC + 2.43)) rises one-for-one with it. The user cost of capital (COC) is unchanged because no tax or allowance moves. Firms invest to close the gap between the market-sector capital stock (KMSXH) and KSTAR, but displacement of commercial construction pulls the other way. IBUS ends ≈0.03% higher in 2030 and ≈0.05% higher in 2031. In plain terms, more homes mean more local demand for shops, services and building materials, but those firms compete with housebuilders for the same tradespeople. 6. **Jobs rise and unemployment edges down.** Market sector employment (EMS) responds to lagged MSGVA growth with a short-run coefficient of ≈0.17 and persistent dynamics. Construction's high labour intensity lifts the gain to ≈25,000 jobs by 2031. Because potential output is assumed to rise alongside, most of these workers come from inactivity, migration and training rather than from the unemployed. Only ≈40% are drawn from unemployment, so the unemployment rate (LFSUR) is ≈0.03pp lower by 2031. This is the usual link between output and unemployment (the Okun relationship), damped here because the labour force expands with the extra activity. 7. **Consumption gains a little, net of a small housing-wealth drag.** Extra pay and self-employed construction income lift real household disposable income (RHHDI) by ≈0.04% by 2031. The consumption equation's long-run income elasticity of ≈0.44 turns that into ≈0.02% more consumption (CONS). Rents and imputed rents on the new homes add a further ≈0.01-0.02%, since housing services are part of CONS. Pulling the other way, APH is ≈0.3% lower than baseline by 2031. Gross physical wealth (GPW) tracks APH but also adds new building through the 0.001 × IHHPS term, where IHHPS is gross fixed capital formation by households, so it falls by only ≈0.2%. With a long-run wealth coefficient of ≈0.11, that trims CONS by ≈0.02%. The net effect is ≈+0.02% by 2031: households earn a little more and gain more homes, but existing owners feel slightly less wealthy. 8. **Prices barely move, and Bank Rate and gilt yields are unchanged.** A tighter labour market typically lifts wages and prices — the Phillips channel. With the output gap almost flat, though, private sector average earnings (PSAVEI) rise by only ≈0.03% through the −0.0096 coefficient on the change in LFSUR. Extra supply trims market rents by ≈0.15%, using a rent elasticity to the housing stock of ≈−1. With actual rents ≈7% of the CPI basket, the consumer expenditure deflator (PCE) ends ≈0.01% lower by 2031. Higher construction costs show up in investment deflators rather than consumer prices. Bank Rate (R) is held on its baseline path, and the 20-year gilt yield (RL) is unchanged. Public sector net debt (PSND) ends only ≈£1.8bn lower, well under 0.1% of the stock and far too little to shift term premia. ### Key assumptions - **Baseline housing supply:** The March 2025 forecast, including the December 2024 planning framework reforms, has net additions rising to ≈305,000 in 2029-30 and ≈300,000 in 2030-31 on the roll-forward. The proposal's 300,000 target is therefore treated as already delivered in the baseline and is not scored. - **Incremental supply from zoning:** ≈6,000, 16,000 and 23,000 extra net additions in 2029, 2030 and 2031, about 2%, 5% and 7.5% above baseline, with no net effect in 2028. This is analyst judgement, informed by Auckland's 2016 upzoning, which substantially raised dwelling consents in upzoned areas. It is scaled down because the baseline is already permissive and build-out rates are limited. - **Construction value per extra home:** ≈£230,000 by 2030, excluding land. Baseline private dwellings investment (IH) is ≈£140bn a year in 2031, so the net shock is ≈3% of that line. - **Displacement of other construction:** 25% of gross extra housebuilding, reflecting tight construction labour. Of this, 20 points come from improvements and other dwellings work and 5 points from business structures. - **Import content of housebuilding:** ≈20%, slightly below the model's 0.234 weight on all investment. - **Supply-side treatment:** TRGDP is raised by ≈80% of the GDP gain, reaching +0.09% by 2031. This mirrors the OBR's 2025 treatment of planning reform as a potential-output measure, so the output gap moves by no more than 0.02pp. - **Capital-stock adjustment:** KSTAR has an elasticity of 1 on MSGVA and −0.4 on COC, and the real depreciation ratio (RDELTA) is 2.2% a quarter. Business capital therefore closes only part of its gap within the horizon. - **House-price and rent response:** A house-price elasticity to the housing stock of ≈−2 and a rent elasticity of ≈−1. This puts APH ≈0.3% and private rents ≈0.15% below baseline by end-2031. - **Monetary-policy reaction:** Bank Rate (R) is held on the baseline path, and RL is unchanged, moving by well under 1bp. - **Tax content of extra output:** ≈25% of extra nominal GDP, with ≈90% collected within the calendar year. This is below the ≈37% whole-economy ratio because new homes are zero-rated for VAT and imputed rent is untaxed. - **Implementation cost:** ≈£0.3bn over 2028-2031 in new-burdens funding for ≈300 local planning authorities, net of small savings on appeals and committees. - **Local receipts and infrastructure:** Extra council tax and Community Infrastructure Levy are assumed spent by local authorities, so they leave borrowing unchanged. Departmental spending is fixed in cash, so no extra school, GP or road spending is scored. - **Fiscal and GDP baseline:** Nominal GDP is ≈£3.42tn in 2030 and ≈£3.53tn in 2031. PSND is ≈£3.4tn, ≈96% of GDP, at end-2031. The in-model links used here are comparatively firm: the NETAD identity, the investment and import identities, the KSTAR elasticities, and the consumption and employment equations. But they carry only a small part of the result. Almost everything hinges on one external judgement: how many extra homes zoning delivers beyond a baseline that already assumes ≈300,000 a year. If the supply response is halved, GDP, receipts and the borrowing saving all roughly halve. If it doubles, they double too, with a GDP effect nearer 0.25% by 2031. A doubling is plausible if construction capacity expands quickly, or if the baseline planning reforms underdeliver and zoning fills the gap. A transitional hiatus could turn 2028-29 negative: authorities slow to adopt codes, legal challenges and builders waiting for clarity could all delay starts, as happened briefly around earlier planning reforms. The second key external judgement is the supply-side treatment. If the extra building were treated purely as demand, with TRGDP unchanged, the output gap would open by ≈0.1pp. The Bank of England would then be expected to lean against it, and the GDP and receipts gains would be perhaps a third to a half smaller, with a basis point or so on RL. The displacement share, the value per home and the tax content each move receipts roughly in proportion. The house-price and rent elasticities matter mainly for the distributional read and the small consumption wealth effect rather than for the public finances. All of these are estimates with wide bands; a plausible range for the cumulative borrowing saving is ≈£0.5bn to ≈£4bn. ### Headline results The macroeconomic footprint is small and back-loaded. Real GDP (GDPM) is ≈0.01% above baseline at the end of 2028, ≈0.05% at the end of 2029, ≈0.09% at the end of 2030 and ≈0.11% by the end of 2031, almost all of it the extra housing investment itself. That is roughly half the ≈0.2% the OBR attributed to the baseline planning reforms by 2029-30. Business investment (IBUS) is flat until 2029 and ≈0.05% higher by 2031, as the accelerator from higher market-sector output just outweighs the crowding-out of commercial construction. Consumption (CONS) creeps up to ≈0.02% as construction pay feeds household income, partly offset by a slightly lower value of the housing stock. The labour market and prices barely register. The unemployment rate (LFSUR) is ≈0.01pp lower in 2029, ≈0.02pp in 2030 and ≈0.03pp in 2031, because most of the ≈25,000 extra jobs are filled by people joining the labour force. The consumer expenditure deflator (PCE) is unchanged until a ≈0.01% dip in 2031, as slightly lower rents feed through to the CPI. With no meaningful pressure on the output gap or the debt stock, Bank Rate and the 20-year gilt yield (RL) are unchanged throughout. The profile builds rather than fades because the pipeline from permission to completion is long. Almost nothing net is delivered in 2028, and completions reach their full ≈23,000-a-year increment only in 2031. Unlike a fiscal stimulus, the effect does not unwind when the building stops, because each completed home adds permanently to housing services and to the economy's capacity. If the higher building rate is sustained, the level of GDP would keep edging up beyond 2031, as in the OBR's own planning estimates, which roughly doubled between 2029-30 and 2034-35. The scale, though, rests overwhelmingly on the judgement about how much extra supply zoning unlocks over an already ambitious baseline.

### Costing the policy - **Gross static cost (mechanical spending increase):** +£0.30bn on public sector net borrowing (PSNB) over 2028-2031. The only mechanical cost is new-burdens funding for ≈300 English planning authorities to turn local plans into binding zoning codes, plus digital and inspectorate set-up. It enters as a rise in general government final consumption (CGGPSPSF) of ≈£150m in 2028, tapering to ≈£20m a year by 2031 net of small savings on appeals and committees. There is no behavioural-taper row because no tax rate or allowance changes. - **Net property-transaction tax gain:** −£0.05bn. Stamp duty land tax (SDLT) raises ≈£6,000 on each of up to ≈19,000 extra new-build sales a year. Most of that is offset by lower SDLT on existing sales as average house prices (APH) drift ≈0.3% lower, and by buyers who would otherwise have bought an existing home. - **Demand feedback (income tax, NICs, corporation tax and VAT on extra construction activity):** −£1.70bn. Nominal GDP is ≈£0.2bn, £1.7bn, £3.2bn and £4.0bn higher in 2028-2031, or ≈£9bn cumulatively, almost all from the extra building work. The tax content is ≈25%, lower than the ≈37% whole-economy ratio because new homes are zero-rated for VAT and imputed rent is untaxed. With ≈90% collected in-year, that recovers ≈£1.7bn. - **Supply-side receipts feedback (higher potential output and a larger housing stock):** −£0.30bn. This is the part of the receipts gain that persists: trend output (TRGDP) is ≈0.09% higher, and ≈45,000 more homes generate rents, landlord income tax and housing-related activity. It grows to ≈£0.2bn a year by 2031 and would keep rising beyond the horizon. - **Debt-interest saving (lower debt):** −£0.08bn. Public sector net debt (PSND) is lower from 2029. At a marginal financing cost of ≈4.5%, with the 20-year gilt yield (RL) unchanged, this saves ≈£0.06bn in 2031. - **Net cumulative PSNB change:** −£1.83bn. This is the sum of the rows above. Borrowing is ≈£0.1bn higher in 2028 while codes are drafted, then ≈£0.3bn, £0.7bn and £0.9bn lower in 2029, 2030 and 2031. That leaves a small permanent improvement of ≈0.03% of GDP a year by the end. ### Debt path The change in borrowing maps almost one-for-one into debt. PSND is ≈£0.1bn higher at end-2028, then ≈£0.2bn, £0.9bn and £1.83bn lower at end-2029, 2030 and 2031. The baseline stock is ≈£3.4tn in 2031, ≈96% of GDP. The debt ratio falls by more than the cash numbers alone imply, because nominal GDP, the denominator, is also higher. Nominal GDP is ≈£3.53tn in 2031. The lower numerator reduces the ratio by ≈0.05pp (−£1.83bn ÷ £3,530bn). Nominal GDP ≈0.10% above baseline (real GDP +0.11%, consumer prices −0.01%) takes off a further ≈0.10pp (0.96 × 0.10). PSND/GDP therefore ends ≈0.15pp lower. On the OBR's standard assumptions the policy more than pays for itself: every £1 of implementation cost brings back ≈£7 of receipts within the horizon. The fiscal prize is modest, though, at ≈£0.9bn a year by 2031. It leaves no structural hole, but it is not big enough to change fiscal headroom materially. The main returns, more homes and lower housing costs, fall largely outside the public finances and beyond 2031.

### Overall pattern For households' direct cash income, the reform is close to a wash. By 2031 private renters pay ≈£140m a year less rent and recent first-time buyers save ≈£50m a year on mortgages. Individual private landlords receive ≈£115m a year less rental income after tax. Households are left ≈£50-75m a year better off in aggregate, about £2 a household. On the business side, the direct beneficiaries are housebuilders, especially small and medium-sized builders, for whom planning delay and refusal risk are proportionately costliest. Landowners and strategic land promoters lose part of the scarcity premium attached to land with permission. Effects are largest in high-demand areas such as London, the South East and the East of England, where discretionary refusals bite hardest. The pattern is progressive but tiny. Renters, concentrated in the bottom half of the distribution, gain most as a share of income. Landlords, concentrated in the top two deciles, lose most in both cash and percentage terms. Existing homeowners also see average house prices (APH) ≈0.3% lower, ≈£1,000 on a typical home, but that is a change in wealth, not income. Once future taxpayers bank the ≈£0.9bn a year fall in borrowing, the average household is ≈£30 a year better off, and no income decile is a material net loser. ### Who gains - **Recent first-time buyers (bought 2029-2031):** ≈£50 a year, ≈0.09% of income. With APH ≈0.3% below baseline by 2031, a typical first-time buyer paying ≈£330,000 saves ≈£1,000 on the price. On an 85% mortgage at ≈4.5%, that is ≈£50 a year in lower repayments, plus a slightly smaller deposit. The gain per household is small because zoning adds only ≈0.15% to the housing stock within the horizon. - **Private renters:** ≈£25 a year on average, ≈0.07% of income. Rents re-set at new lets and renewals, so by 2031 ≈70% of renters face market rents ≈0.15% lower, saving ≈£35 on a ≈£17,500 annual rent. Low-income renters whose rent exceeds the Local Housing Allowance keep the whole saving. ### Who loses - **Individual private landlords:** ≈−£50 a year, ≈−0.08% of income. Rental income falls ≈0.15%, ≈£60 a year before tax on a typical holding, the mirror image of renters' gain. About 85-90% of private rented homes are owned by individuals, concentrated in the top two income deciles. Landlords also see the capital value of their property ≈0.3% lower, a wealth loss that is not counted here. ### Paying for it and bond markets - **Future taxpayers:** ≈+£30 a year per household, ≈0.07% of income. Public sector net borrowing (PSNB) is ≈£0.93bn a year lower in 2031; divided by ≈29 million households, that is ≈£32, rounded to ≈£30 a household a year. This is an ongoing annual amount that grows as the extra homes keep generating activity, not a one-off or a total over the horizon. - **Future taxpayers (lower debt):** ≈£65 a household. Public sector net debt (PSND) is ≈£1.83bn lower by the end of 2031; divided by ≈29 million households, that is ≈£63. This is a one-off total that future taxpayers no longer have to service or repay. - **Mortgage borrowers:** £0. The 20-year gilt yield (RL) is unchanged in the macro table, moving by well under 1bp, so new and refixed mortgage rates do not move. The bond-market effect is negligible. Under the fiscal rules this lower borrowing is either banked as extra headroom or eventually recycled. If returned through broad-based tax cuts, higher-income households would gain more in cash because they pay more tax. Because the measure reduces rather than adds to borrowing, no hidden losers wait in the financing. A deficit-financed giveaway is different: it creates losers later even when none are visible today. ### Across the income distribution The bottom five deciles each gain ≈£4 a year, 0.01-0.03% of income. Deciles six to eight gain ≈£2-3, the ninth decile is roughly unchanged at ≈−£1, and the top decile loses ≈£9 a year, ≈−0.01%. This shape follows tenure. Private renting is most common in the lower and middle deciles, so lower rents help them most as a share of income. First-time buyers cluster in the middle and upper-middle deciles, which fills out deciles four to nine. Buy-to-let ownership rises steeply with income, so the landlord loss lands mainly at the top. The top decile loses most in cash and the bottom gains most as a share of income, so both readings tell the same progressive story. The averages hide sharper cases. Low-income renters in high-rent areas such as London gain the most. Retired landlords with low measured incomes appear as small losers in the lower deciles. Young adults who can move out of a parental home or house share gain access to housing, which does not show up as cash income at all. The ≈25,000 construction jobs created are a second-round effect and are excluded from the decile figures. ### Caveats The figures rest on judgements about incidence: a house-price elasticity to the housing stock of ≈−2, a rent elasticity of ≈−1, the speed at which lower market rents pass through to sitting tenants, the ≈85-90% share of private rented homes owned by individuals rather than institutions, and treating the first-time buyer gain as a mortgage-cost saving. They are static first-round effects in 2031. They exclude the small second-round macro effects shown above: extra construction jobs and pay, a ≈0.03pp fall in unemployment, a negligible change in consumer prices and no change in interest rates. Averages also mask wide variation by region and local planning context, since zoning bites hardest where refusals and delay currently bind. The figures lean on the English Housing Survey and Family Resources Survey for tenure by income, ONS Effects of Taxes and Benefits for decile incomes, HMRC property-income statistics for landlords, and MHCLG net additions data for the housing baseline.