Fast Arithmetic

The numbers always catch up with the ambition in the end, and as bold as the government's commitment to deliver 1.5 million new homes in England over this Parliament was, the arithmetic is starting to bite. The latest estimates suggest that around 342,100 homes were delivered between July 2024 and March 2026. That is roughly 23% of the target, achieved across roughly 35% of the available runway before the next election, due by August 2029. To land the full 1.5 million, delivery over the remaining period needs to run at a pace materially above anything the sector has managed in recent memory, and comfortably above the roughly 370,000 homes a year that official estimates suggest are needed simply to keep up with demand.

The government's response is that delivery was always expected to accelerate rather than follow a straight line, so at some stage we will see exponential growth; planning reform takes time to feed through, and the Social and Affordable Homes Programme is barely six months old, and the National Housing Bank is barely out of its wrapping paper. But "the back half will be better" is a forecast every development finance professional has heard before, usually shortly before a scheme overruns. Looking more closely at the leading indicators, the picture is genuinely mixed. There were 33,960 housebuilding starts in England in the first quarter of 2026, down 9% from the previous quarter but up 18% from the same quarter in 2025. Depending on your disposition, that is either a recovery losing momentum or a recovery finding its feet after a brutal couple of years. Context really does matter here; starts peaked at 68,350 in a single quarter in mid-2023, a figure inflated by builders racing to break ground ahead of new building regulations. Strip out that distortion, and the underlying trend is a sector still operating well below the level implied by the 1.5 million target, and housing starts in mid-2025 were still more than a fifth below pre-pandemic levels. The catch-up required is not marginal; it’s a deep structural change in the way we build homes. The demand side is also a headwind due to stagnant earnings, with mortgage approvals in May down 11% year on year, and the Bank of England holding rates at 3.75% in June, with only two members of the Monetary Policy Committee voting for a rise. The era in which falling borrowing costs would do some of the target's heavy lifting and come to the sector's aid has, for now at least, been postponed.

So here is the argument we keep returning to, because the numbers keep insisting on it: the 1.5 million target is mathematically unreachable through volume housebuilders alone.

40 years ago, small and medium-sized developers accounted for around 40% of England's new homes. Today that figure has collapsed to somewhere between 10% and 12%. The reasons are well documented: planning delays, which 94% of SMEs cite as a major barrier to growth, the withdrawal of clearing-bank appetite for small development lending after 2008, and a regulatory cost base that scales punishingly for anyone building in the dozens rather than the thousands. The consequence is a supply pipeline dangerously concentrated in a handful of PLCs whose business models are built around margin discipline rather than volume maximisation. A listed housebuilder facing soft absorption rates slows its build-out programme, protects its price points, and answers to its shareholders. That is rational behaviour. It is also precisely why national targets and PLC output schedules will never fully align. SME developers behave differently. They build out small and medium sites quickly because their capital is committed and their carrying costs are real. They take on the awkward infill plots, the brownfield corners, the schemes of eight or fifteen units that the majors will not mobilise for. Every serious analysis of the target, including the government's own, reaches the same conclusion: without a revival of the SME sector, the volume simply isn't there.

Planning reform, grey belt release, the Future Homes Standard transition, all of it matters, but all of it takes years. But the constraint that can be moved fastest is finance.

An SME developer with a consented site and a credible contractor does not need another well-written white paper, especially given the sufficient white papers stored in Whitehall already on these topics, (enough to dwarf the 24 scrolls of the Iliad), they just need committed senior debt, drawn in stages against certified progress, from lenders that understand residual land values and can move at the speed of a purchase deadline.

This is where the alternative lending sector has quietly become national housing infrastructure. Platforms lending senior, first-charge capital to SME residential developers at sensible leverage, with proper monitoring, are doing the unglamorous work of converting planning permissions into completions, one mid-sized site at a time. The Homes England Lending Alliance exists precisely because government recognises that this channel needs deepening, not just applauding.

For investors, the same arithmetic reads differently but points the same way. A structural, politically guaranteed demand for development capital, secured against first legal charges at conservative loan-to-gross-development-value ratios, in a market where the traditional providers of that capital have retreated, that is not a bad place for patient money to sit while the Bank of England makes up its mind about rates.

Will the government hit 1.5 million homes by 2029? On current trajectory, no and most independent analysts have stopped pretending otherwise. But the target's political weight means the pressure to accelerate delivery will only intensify from here, and every credible acceleration route runs through the same bottleneck: more small- and medium-sized sites, built by more SME developers, and funded by lenders willing to back them. The homes England needs will not arrive in a single £24 billion announcement. They will arrive twelve units at a time, on sites most people will never read about, financed by capital that understood the arithmetic before Westminster.

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