Summary

• There is an increasing demand from the major housebuilders to increase the number of outlets they are operating in order to boost volumes, which will drive land buying over the next year.
• Smaller developers are likely to remain more cautious, as viability and the cost of finance continue to be major barriers to development.
• The first stage of the new Social and Affordable Homes Program has a short window for delivery, meaning Housing Associations will need to secure land in order to demonstrate they can move at speed.

Appetite for development land was mixed over 2025. The combination of slowing sales rates and fewer cuts to the base rate than anticipated at the start of the year combined to produce a market where caution was a key driver. This was particularly pronounced across the South of England; in the more affordable markets of the Midlands and the North, demand proved to be more robust in the face of headwinds. However, in light of the revised NPPF creating more opportunities in planning, demand for strategic land was consistently strong.

The PLC housebuilders

Looking ahead to 2026, there is likely to be some uptick in demand for land from the major housebuilders. Although sales rates did drop over the summer of 2025 and remained low in the run up to the budget, the cut to the base rate at the end of December has led to average mortgage rates falling to their lowest level since 2022. Further base rate cuts are forecast for 2026, improving affordability for mortgaged buyers. This should result in a pick-up in sales rates, with the knock on impact of increasing appetite for immediate land.

However, in the absence of a new build buyer support scheme like Help to Buy, the main way for major housebuilders to increase volumes will be by selling from a larger number of outlets. For example, Barratt Redrow stated in their most recent annual report the ambition to increase the number of sales outlets from 405 in financial year 2024/25 to 475 - 525 outlets in the medium term.

The number of outlets the major housebuilders operate from has been heavily squeezed over the last few years, as the planning landscape became increasingly challenging. The average number of outlets reported in trading statements of the five largest developers has fallen by 15% since 2018, although 2025 did see a slight increase against 2024. As such, the major housebuilders are likely to continue looking for sites that can enable them to sell into more markets, whether through buying immediate consented sites, bringing forward land from their strategic pipelines, or pursuing land swaps or sales of serviced parcels on larger sites.

SME Housebuilders

Although smaller housebuilders will also benefit from improving affordability for homebuyers, they are still likely to be cautious in the land market. The Federation of Master Builders 2025 Survey showed two key land pressures for smaller developers. 33% of respondents cited a lack of available sites as a barrier to development, suggesting that there should be plenty of capacity from this part of the market to absorb any increase in land supply.

But 31% of respondents also raised concerns that the sites available to them were not financially viable for development. Finance costs were rated as a significant barrier by over 60% of survey respondents; as these types of developers tend to secure debt on a project by project basis, they have a higher cost of finance than larger housebuilders. Consequently, land buying will continue to be selective, with limited capacity for sites with higher infrastructure requirements, or where a partner to buy the S106 units can’t be found at an early stage.

Affordable housing providers

Housing Associations have been weak in the land market over the past 3 years, as many providers instead prioritised investment on maintaining their existing stock. In 2016, Housing Associations bought 17% of the development land sold by Savills; over the last three years their share had fallen to just 6%.

There are some signs this is beginning to change. Savills’s survey in July 2025 of the 50 largest developing Housing Associations found that 39% of respondents were planning to increase their development pipelines following the Spending Review, and over 50% of respondents planning to build at least 500 new homes per year over the next five years.   

Further impetus is likely to come from the new Social and Affordable Homes Program, announced last November. The scheme will provide a substantial increase in funding for the delivery of new affordable homes, with £27.3bn to be allocated outside of London over the next ten years.

Bids for funding will open in February 2026, with the first round expected to be allocated from Q2 2026. Grant will be focused on sites which can deliver completed homes by March 2029 and count towards the Government’s 1.5 million homes target. Housing Associations bidding for funding through either the Strategic Partnerships or Continuous Market Engagement routes will be at an advantage if they can demonstrate that they can move at speed.

This means finding sites which can progress quickly and partners who can deliver quickly. As a result, Affordable Housing Providers are likely to be much more active in the land market over the next year than they have been for the preceding two years, whether acting independently or in conjunction with a development partner. Consented schemes with capacity for 100-200 homes, that are possible to complete in a tight timeframe, will be in highest demand.

We therefore expect that 2026 will continue the trend of the last two years of a steady increase in land buying activity. With greater activity particularly from the larger housebuilders and affordable providers, there should be capacity in the market to absorb any increase in supply that results from the planning reforms of the last 18 months. 

For more information, our research hub shares the latest data and expert insight into the residential development and investment markets.