Planning approvals for home-scale projects fall by over one-fifth

Householders across the UK are cutting back on major home refurbishments amid surging interest rates, data science firm Outra reports.

The fall has been blamed on the surge in interest rates and a stagnant housing market, which suggests households are shying away from releasing cash from their homes to help fund home improvement works.  

Data science company Outra has analysed the number of planning applications for the three months to the end of February compared with the same period a year earlier.

The number of applications fell from 62,963 to 48,942 (22.3%).

Regionally, the most significant percentage falls were in Wales (32.2%) and East Midlands (26.3%). 

Planning applications in London and the Southeast fell by nearly 3,000 over the period (23.9% and 23.4% respectively). 

Most of the projects covered by the data (more than 80%) are small and medium extensions costing between £40,000 and £100,000 (excluding VAT).

Outra founder, Giles Mackay, said the data suggests householders are less likely to borrow to pay for big home improvement projects given higher interest rates and an end to the era of cheap household debt.

“The evidence suggests mortgage holders are thinking twice before taking on new debt to fund investment in their homes.

“Higher interest rates mean additional borrowing will have a very real and immediate impact on a borrower’s standard of living or else extend the length of time it will take to pay back their mortgage,” said Giles. 

He continued: “This reduced activity could an unwelcome knock-on effect for the economy because it could mean builders, roofers and tradesmen across the spectrum have less work.

“This demonstrates the need for those across the building trade and beyond to pursue a more targeted approach to identifying householder demand using data.”

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