What’s in store for the built environment in 2026?

Labour’s approach to the built environment in 2025 was defined by both ambition and uncertainty. The Government introduced a swathe of reforms – including the Planning and Infrastructure Act, Renters’ Rights Act, and a consultation on changes to the National Planning Policy Framework – aimed at modernising the planning system and delivering on its flagship pledge to build 1.5m homes by the end of this parliament. But the backdrop has been far from ideal. 

The Government is falling well short of its pledge to deliver 1.5m homes, with housing starts and completions significantly below targets. In London, the situation is particularly stark – the capital is facing its worse housebuilding crisis since the Second World War, with a 72% year-on-year drop in housing starts. Developers continue to grapple with viability challenges – driven by high interest rates, inflation, and ongoing delays in planning. Meanwhile, several key reforms expected in 2025 have been pushed into 2026, contributing a sense of uncertainty across the sector.

So, what’s on the horizon for the year ahead?

Draft Leasehold and Commonhold Reform Bill 

The Government published its long-awaited draft Leasehold and Commonhold Reform Bill this week and launched a consultation on plans to ban new leasehold flats. The proposals, announced first in a somewhat unusual way via TikTok, include capping ground rents in England and Wales at £250 a year – reducing to a peppercorn after 40 years – and giving existing leaseholders the right to switch to commonhold ownership.

Originally expected in late 2025, the bill faced “unforeseen delays” – underlining just how complex and politically sensitive a full-scale reform of the leasehold system remains. Labour has promised to go further than the previous Conservative Government in strengthening leaseholder rights, building on the 2024 Leasehold and Freehold Reform Act.

When it appeared that the government may backslide on their commitments, pressure came from within Labour’s own ranks. Former Housing Secretary Angela Rayner, until the autumn responsible for this area of policy, urged the Government to honour its manifesto commitment to cap or curb ground rents, arguing that millions of leaseholders face escalating and unjustified charges that benefit “unaccountable investors”. Rayner’s intervention may owe as much to her positioning within the Labour party at a difficult time for the Prime Minister as it does to leasehold reform as a policy issue.  

The current government is finding out that leasehold reform is both politically fraught and fiercely technical. The Conservative government’s legislation was rushed through at the last minute in the wash-up before the 2024 General Election and as a result it was incomplete and was criticised for being defective.

It also faced considerable opposition by major landowners and some of the great estates. This culminated in a High Court challenge by major freeholders against the 2024 Act, but this was dismissed last year. However, concern remains over the risk of retrospective caps on ground rents. Global investors warn that such measures could deter billions of pounds in investment into the UK. With Labour promising to go further, there could be a risk of a fresh legal challenge. With the draft bill now open for consultation, 2026 is likely to see intense debate – both in Parliament and across the sector.

New Town locations chosen by Government

In September 2025, the New Towns Taskforce published a shortlist of 12 potential locations for the next generation of new towns – each expected to deliver at least 10,000 homes. The Government will consult on its preferred sites in early 2026, with final decisions due in the spring following Strategic Environmental Assessments.

In London, Thamesmead has emerged as a key potential new town location. Development in this area has long been constrained for decades by poor transport connectivity. But after many years of campaigning by the local councils and City Hall, the Autumn Budget committed funding for a Docklands Light Railway (DLR) extension via Beckton Riverside, which aims to unlock up to 30,000 new homes and create 10,000 jobs.

Unsurprisingly, viability is already emerging as a sticking point. The original pledge for 40% affordable housing in New Towns has already been watered down, with Housing Minister Matthew Pennycook recently describing it as an “aspiration” rather than a commitment. Tensions between ambition and delivery are also expected to sharpen – especially where political support for new towns collides with local opposition.

Future Homes Standard 

The Future Homes Standard (FHS), due to be published this month, will outline energy efficiency requirements for all new homes built in England. It’s expected to mandate solar panels by default, with exemptions for homes shaded by trees or nearby structures. 

However, some key proposals have already been dropped – including mandatory battery storage – because of the impact on viability.

At the same time, experts have warned that new homes are not designed to cope with increasingly extreme summer temperatures. While the FHS has mainly focused on energy efficiency and keeping homes warm in winter, there is growing pressure in some quarters to ensure it also addresses overheating risks. But, as with battery storage, achieving this without undermining the chances of new homes being built is a key challenge.

Housing Strategy and Transport Strategy

Two major strategies originally expected in 2025 are now anticipated in 2026.

The Government’s 10-year Housing Strategy will aim to provide long-term regulatory certainty, tackle remediation, and attract investment. Last year’s £39bn Social and Affordable Homes Programme – targeting 300,000 homes, 60% for social rent – forms a large part of this. Bidding for the programme opens next month, with housing associations, councils and developers all expected to compete for funding.

The Integrated National Transport Strategy, the first of its kind in 25 years, is also due this year. Following a “call for ideas” that closed in February 2025, little has been made public but it is expected that the strategy will focus on empowering local leaders, improving connectivity, and aligning transport and housing delivery, the latter being something London is already used to, given the Mayor’s responsibilities for the London Plan and transport strategy.

London will be watching closely. With the DLR extension to Thamesmead secured, attention turns to the Bakerloo Line extension to Lewisham (and beyond) and the West London Orbital – both key to unlocking over 35,000 new homes. Plans for the West London Orbital have moved forward, with London Mayor Sadiq Khan allocating £400,000 to support development of the business case whereas the Bakerloo Line extension route is agreed, consulted on and safeguarded – just waiting for the funding to get shovels in the ground. All eyes will be on whether the government can pull off aligning transport and housing strategies in a way that unlocks thousands of new homes key to their 1.5m target.

A new planning or nature bill? 

The Planning and Infrastructure Act received Royal Assent in December 2025 and will slowly begin to be implemented this year. Key measures include delegating more decisions to planning officers, streamlining Nationally Significant Infrastructure Project (NSIP) processes, and creating a new Nature Restoration Fund to support environmental obligations. Expectations are certainly high – Housing Secretary Steve Reed boldly claimed the Act could “halve” planning delays.

The Government is already looking at what comes next. There is some internal debate about whether new primary legislation is needed to reform rules on protected species and the fast-tracking of large infrastructure projects. Some changes could be delivered via secondary legislation, but a new planning or nature bill has not been ruled out in the next King’s Speech, expected later in the Spring..

Meanwhile, reports suggest a forthcoming AI Bill could include automatic planning approval for data centres in designated “AI Growth Zones”, bypassing environmental impact assessments unless blocked by ministers or local mayors.

Conclusion

This year is shaping up to be a pivotal for the built environment – one defined by delivery, implementation and political pressure to show progress. From long-promised leasehold reform to major decisions on new towns, planning, and housing standards, the policy agenda is certainly full – and expectations are high. While the built environment sector struggles to digest the pace of change, the government is showing few signs of any let up in their planning reforms any time soon.

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