New Homes: A Look Back at 2024 and What to Expect in 2025

The UK’s new homes sector witnessed significant changes in 2024. With the Labour Party taking office in July, the government set ambitious housing targets and introduced substantial reforms to address the nation’s housing needs. As the year concludes, let’s explore how these changes have shaped the market and what lies ahead in 2025. 

2024: A Transformative Year for New Homes 

One of the most significant shifts in 2024 was the Labour Party’s election and their bold commitment to the housing sector. Early in their term, the government pledged to deliver 1.5 million new homes over the next five years, a considerable increase from previous targets. 

This ambitious initiative signals transformative growth for the UK housing market, presenting exciting opportunities for property investors and first-time buyers alike. 

To achieve this goal, the government has outlined plans to streamline the National Policy Planning Framework, aiming to simplify and accelerate housing development. Additionally, a £3 billion fund has been allocated to support SME housebuilders and the Build-to-Rent (BTR) sector, with an extra £500 million committed to the Affordable Housing Programme. 

Such significant investment in affordable housing marks a critical step toward alleviating the UK’s housing shortage and expanding access to homeownership. 

Between April and September 2024, housing initiatives reported a 12% increase in new build starts and a 32% rise in completions compared to the same period in 2023. However, the challenge remains: can this momentum sustain the pace needed to meet the 1.5 million target? 

The Build-to-Rent sector had a standout year, with over 18,000 completions projected—a record high. Rental demand surged, with BTR properties renting 25% faster than in 2019, reflecting the sector’s appeal to modern tenants seeking flexible housing options. 

The growing popularity of Build-to-Rent properties underscores their role in meeting the needs of renters who prioritize convenience, community, and quality living spaces. 

First-time buyers, however, faced hurdles. Following the Autumn Budget, the tax-free threshold for first homes will drop from £425,000 to £300,000 in April 2025, increasing financial pressure. On the shared ownership front, lease durations were extended from 99 to 990 years, and new affordability guidelines were introduced. Despite these adjustments, the number of shared ownership completions remained largely stagnant, with 20,364 homes delivered in 2023-24 compared to 20,497 the year before. 

Shared ownership schemes in 2024 provided critical pathways for many first-time buyers, offering smaller initial shares and lower upfront costs to help more people climb onto the property ladder. 

Looking Forward to 2025: Will Ambitions Become Reality? 

The housing policies laid out in 2024 will face their first real test in 2025. Meeting the ambitious goal of 1.5 million new homes by 2029 requires constructing 370,000 homes annually—far beyond the 90,000 starts recorded in the first half of 2024. 

As the UK housing sector gears up for a pivotal year, these ambitious targets are sparking debates among developers, councils, and communities. 

While developers remain optimistic, local councils and industry experts have voiced concerns. Labor shortages, planning delays, and community resistance have all been cited as potential roadblocks. Even government officials have acknowledged the difficulties of meeting these ambitious targets within the timeline. 

Planning reforms introduced in 2025 aim to streamline the approval process, making it easier for developers to address the housing crisis and meet growing demand. 

Developers are eager to capitalize on these changes, viewing them as an opportunity to address the housing shortage. The Build-to-Rent sector, however, remains cautious, with ongoing challenges around planning permissions and limited supply continuing to hinder growth. 

With rising demand and ambitious targets, 2025 is poised to be a defining year for the UK housing market. Whether the combination of reforms and investments will succeed remains to be seen.