New analysis from Excellion Capital reveals that Permitted Development Rights (PDRs) could be crucial in helping the Labour government meet its ambitious target of delivering 1.5 million new homes by 2029.
With new-build output falling short, property investors may find opportunity in converting non-residential properties into homes without the red tape of planning permission.
Labour’s target demands more than 300,000 new homes each year, yet recent figures show the government is far off pace.
Excellion Capital’s review of the latest net housing supply data shows that just 198,612 new-build homes were delivered across England in 2023-24 — a 6.5% drop from the previous year and still lagging behind pre-pandemic levels. In 2019-20, by contrast, 219,120 new homes were completed.
COMMERCIAL TO RESIDENTIAL
With new-build numbers moving in the wrong direction, the government may have to turn to alternative methods to boost housing supply. One such route is Material Change of Use – converting properties from commercial to residential use. Last year, 21,591 non-residential properties in England underwent this transformation, though this figure also represented a 3.1% annual decline.

However, Robert Sadler, Vice President of Real Estate at Excellion Capital, believes that PDRs offer a faster, more attractive option for investors.
He says: “PDRs provide a great way for property owners and investors to convert struggling assets into new homes without the need to secure planning permission.
“This makes for an extremely fast project turnaround time, which can be highly attractive to lenders who often see PDRs as a low-risk venture with fast returns.”
PUZZLING TREND
Despite the clear benefits, Excellion Capital’s data shows a puzzling trend: the number of homes created through PDRs has fallen.
In 2019-20, 12,375 residential properties were created this way. The pandemic pushed numbers down to 9,990 in 2020-21, and while they rebounded slightly the following year, last year saw only 8,825 homes delivered via PDRs – the lowest figure since 2019, representing an 8.3% annual decline.
Yet, some regions bucked the trend. Yorkshire & Humber saw a 132.2% increase in PDR-driven conversions, with the East of England up 32.2%, the North East rising 13.4%, and the East Midlands climbing 5.5%.
HIGH INTEREST RATES

Sadler suggests that high interest rates may have previously deterred investors from pursuing PDR opportunities.
He says: “A recent survey of ours reveals that high interest rates were the most pressing concern among property investors in the UK, so perhaps the falling number of PDR instances is because high interest rates required lower leverage and ultimately meant more equity was required.”
However, with interest rates now trending downwards, Sadler is optimistic that investors will re-engage with PDR projects.
“A previously high interest environment shouldn’t be enough to put investors off taking advantage of great opportunities when they arise. And that’s where we at Excellion Capital come in — by recourse to our strong lender relationships, we always know the best priced debt at the right leverage for these projects.”