Over 70% of housebuilders are considering or actively submitting applications for “grey belt” land following recent policy changes, suggesting we are set to see strong takeup for the new designation.
Labour defined ‘grey belt’ as green belt land which was previously developed that does not “check the unrestricted sprawl of large built-up areas”, “prevent neighbouring towns merging into one another”, or “preserve the setting and special character of historic towns”.
Oliver Knight, head of residential development research at Knight Frank, said: “Our latest survey points to a market in transition, with early signs of renewed momentum emerging despite ongoing challenges.
“Easing mortgage costs have supported a pick-up in buyer demand which, in turn, should give developers more confidence when looking at new sites or deciding to start existing ones.
“Looking ahead, falling land values remain the single most important factor that would boost development appetite. The development sector continues to seek greater clarity around economic policy and the future path of interest rates in order to fully rebuild confidence.”
The construction industry is not without its challenges, as 61% see planning delays as a key drag on activity, albeit this is the lowest proportion since 2020.
Meanwhile the majority (83%) are concerned about employment levels in construction.
Market activity shows signs of improvement, with 31% of developers reporting increased site visits and reservations in Q1 2025, up from just 13% at the end of 2024.
Charlie Hart, head of development Land at Knight Frank, said: “Developer sentiment remains cautious but strategic in what continues to be a transitional market.
“Land values are still adjusting as developers respond selectively to a complex operating environment.
“Viability remains front of mind, with build cost inflation and regulatory pressures creating challenges for high-density and urban brownfield schemes.
“Labour shortages across key trades are driving up construction costs and constraining delivery, while added layers of regulation, and escalating Section 106 obligations are dampening demand for certain sites.
“In response, we’re seeing a shift toward lower-risk opportunities, notably clean greenfield sites and strategic land, especially in areas where local authorities have underdelivered on housing targets.
“This measured, risk-aware approach is likely to continue until we see a more incentivised landscape to unlock critical high volume urban housing.”
