In the much-anticipated Spring Statement, Reeves said the Office for Budget Responsibility (OBR) had concluded that the reforms will “permanently increase” the level of real GDP by 0.2% in 2029-30, adding around £6.8bn to the economy.
She noted that the OBR expected planning reforms to have a positive 0.4% impact on real GDP within 10 years, bringing in a further £15bn to the economy.
“That is the biggest positive growth impact that the OBR have ever reflected in their forecast for policy with no fiscal cost, and taken together with our plans to increase capital spending that we set out in the Budget last year, this Government’s policies will increase the level of real GDP by 0.6% in the next 10 years,” Reeves said.
The Government made several changes to the National Planning Policy Framework last year, including the reintroduction of mandatory housing targets, restoration of five-year housing land supply rules and refining the grey belt definition, to name a few.
Reeves said the planning system that the Labour Government inherited was “far too slow” and reforms would lead to housebuilding reaching a 40-year high, according to the OBR.
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Reeves said the OBR forecast 305,000 homes per year by the end of the forecast period, equal to around 1.3 million homes in the next five years.
She noted that this would take the Government “within touching distance” of delivering its manifesto promise of one-and-a-half million homes.
Reeves reiterated the importance of the Planning and Infrastructure Bill, which passed its second reading earlier this week, adding that it “will help deliver the homes and infrastructure our country badly needs”.
Planning reform will have ‘material, additional and durable impact’, OBR says
In its report, the OBR said the effects of the revised National Planning Policy Framework were expected to have a “material, additional, and durable impact on housebuilding, property transactions, and potential output, and a modest impact on house prices”.
The OBR forecast said planning reforms would increase the net additions to housing by 170,000 across the forecast period, equal to around a 0.5% increase in housing stock in 2029-30.
“This increased housebuilding over the forecast period is 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, which, if triggered, requires local authorities to release land for further development unless the adverse impacts of doing so significantly outweigh the benefits.
“Most of this increase takes place from 2027-28, as it takes time for developers to identify sites, local authorities to bring forward local plans, capacity constraints in the sector to be overcome, and additional houses to be built. If sustained, the effects of planning reforms on net additions to the housing stock would build further beyond 2029-30,” it said.
Overall, the OBR confirmed that net additions to UK housing stock were expected to be around 1.3 million from 2025-26 to 2029-30, hitting 305,000 per year by 2029-30.
On the property transaction side, the OBR said property transactions were expected to rise from around 290,000 per quarter at the end of 2024 to around 370,000 per quarter by 2029.
This is around 9,000 more per quarter than October forecasts, due in part to planning reforms and less volatility from stamp duty changes.
“We expect that the planning reforms will increase housing transactions, on average by 4% in the last three years of the forecast as additional completed homes are transacted. This means we now assume that around 1.2% of the total housing stock gets transacted every quarter in the medium term,” it said.
The OBR added that average interest rates on the stock of mortgages are expected to rise from 3.7% in 2024 to 4.7% in 2028 and then remain stable.
The report explained that the large proportion of fixed rate mortgages meant the higher base rate would “feed through slowly” to the mortgage stock.
It stated that the Bank of England estimates suggest a third of those on fixed rate mortgages have not refixed since rates started to go up by mid-2021. Therefore, the higher interest rate impact has “not yet been passed on”.
House prices are expected to rise over the forecast period to around £295,000 in 2029. This compares to around £265,000 at the end of 2024.
House price growth is pegged at 2.8% in 2025 and an average of 2.5% thereafter.
This article was first published on YourMoney.com’s sister site, Mortgage Solutions. Read: Spring Statement 2025: Planning reforms to help grow economy by nearly £7bn by 2030
