Mapping the FutuRE - what does 2025 hold for the real estate sector?

As we progress into 2025, the real estate sector faces a landscape shaped by ongoing challenges and emerging opportunities. Hannah Edwards shares their top predictions for the sector.

Ongoing concerns over Affordable Housing Delivery

In December 2024 Homes England launched the Section 106 Affordable Housing Clearing Service to help facilitate and accelerate the sale of uncontracted and unsold affordable homes across England (excluding London) to registered providers. This follows a steady reduction in the number of providers actively bidding for affordable homes.

Whilst the Clearing Service might go some way in addressing the issue, there is also evidence to suggest that the downturn in interest from providers is in part due to affordable homes not meeting providers’ needs.

Could 2025 see greater collaboration between developers and registered providers at an early stage in the planning process, ensuring that registered providers get the stock they need, and developers are able to avoid delays in selling affordable homes and consequential impact on delivery of market housing? Or, will the ongoing issues lead to a greater number of developers applying to modify existing affordable housing provisions, either to reduce provision or, to include flexibility and cascade mechanisms? 

Quicker decision making 

A large number of planning applications are determined by planning committee; this can lead to delay, increased costs and  politicised decision making which is subject to challenge - factors the Government is clearly alive to (an informal consultation on proposed reforms to planning committees is currently underway, which includes proposals for increased training for members and wider scope for decisions to be taken by skilled and experienced planning officers).

Will the outcome of the review give more power to planning officers and will this result in a more streamlined and robust decision making process facilitating increased housing delivery? 

A quicker, cheaper and fairer compulsory purchase process?

The Government has launched its consultation on further reforming the compulsory purchase process and compensation rules. Many of the proposed changes, such as permitting electronic service of notices and documents, adjustments to statutory loss payments and allowing acquiring authorities to confirm their own CPO’s where non-controversial modifications are required are likely to prove welcome. It remains to be seen whether the proposed powers to broaden the existing power to remove hope value from the assessment of compensation in certain circumstances, will, if enacted, make the system quicker, cheaper and fairer as intended. There is a risk that introduction of such powers could deter developers from investing in site acquisition and promotion for fear that delays in progress would risk compulsory purchase but without the ability to claim compensation for the prospect of planning permission being granted. 

As these reforms unfold, the real estate sector must navigate these complexities to achieve a balanced and sustainable growth trajectory in 2025.

At Mills & Reeve, we're scanning the horizon and Mapping the FutuRE. Visit our interactive city and read our insights on the challenges and opportunities for our sector across a range of assets and key themes.

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