Building the future: how sustainable regeneration is transforming UK communities
Effective regeneration is not a one-size-fits-all solution but rather a process that considers the unique needs, resources, and challenges of each community.
At a round table event sponsored by Phoenix Group, one of the UK’s largest retirement and savings providers, an expert panel gathered to discuss how collaboration, policy support, and investment in local communities can shape a sustainable future.
Phoenix has committed to investing with an Environmental, Social, and Governance (ESG) focus, to drive positive societal impact and support the levelling up agenda. Their assets, totalling more than £50bn, represent the savings of 14 million people across the UK.
Our expert panel highlighted several significant challenges in the planning and development sectors, including resource constraints, unpredictable committee decisions, and the high-stakes nature of planning approvals.
Planning Challenges
The discussion addressed the challenges faced by local authorities, where planning departments are often under-resourced. The volume of work expected from local governments exceeds the resources available, leading to backlogs and delays that can disrupt project timelines. Beyond planning departments, stakeholders like highways and utilities companies often can add another layer of complexity to development projects.
Ben Leather, regional director for the Midlands at Keepmoat Homes said: “Everyone is experiencing challenges with planning commissions, whether that’s from a resourcing point of view as there’s not nearly enough planners to process these applications.
“But it goes beyond just the local policy and planners, highways, for example, is a huge, huge barrier to development
“You can come to a point where you spend thousands of pounds on your application, spend the best part of the year on average negotiating that application, you’ve got enough recommendation for approval and then it’s a lottery at planning committees for every year.
“You’ll get it allowed, or get it deferred, or worse, go off to appeal and spend more on an appeal. It’s high-risk stakes for us on my side of the table”.
For Eleanor Deeley, managing director of the Deeley Group, the issue isn’t just on under-resourced planning officers but also members.
She said: “We’ve got a commercial scheme that we’ve PCED a year ago. We haven’t gotten Section 270 you know, which is delaying a whole lot of different things.
“We’re very much a smaller developer focused on later living and have around 700 units currently in progress on site.
“For us, it’s the lack of consistency in the amount of time that it takes and the cost of getting the application in. We’re employing local people, and we want to engage with the community but it’s difficult to do so with the unpredictability”.
For the last 15 years, Artemis Ansell, director of planning and regeneration at Lichfield Council has been delving into planning departments as a consultant and looking how they can be fixed.
Whilst she understands developer’s frustrations with resourcing, she said a common theme is that there are, “a lot of developers who don’t come to the table early on to discuss their potential developments with the planning departments”.
She said: “I believe in good planning, performance agreements, but it’s also about that early engagement of what you want to do, and being that middleman to speak to residents, local groups and members, and bringing them along the journey as well.
“It means that by the time you do get to planning committee, they know what they’re looking at, they fully understand and appreciate what they’re looking at.
“If they have confidence in the report and what the officers are presenting to them, more often than not, they will go with that as well. Where it breaks down is when the chain has broken along the way, or it becomes a very them and us culture – there’s a lack of trust”.
One huge policy change developers are facing is around fire safety and building regulations. The government has ruled that second staircases are now mandatory in all new residential buildings over 18m.
Adam Willetts, associate director at Urban Splash said: “All of us around the table support the new measures, but we don’t know what the unintended consequences are. It’s going to delay getting homes built, particularly high-rise apartments, and that’s an issue. It’s the right thing to do, but it adds to concerns, issues and challenges”.
Financial Climate and Viability Gaps
The financial climate, influenced by high interest rates and inflation, has further strained the viability of regeneration projects. Anand, senior investment manager at the Phoenix Group noted that many public sector projects with strong social value are being delayed due to financial constraints, leading to an uncertainty around long-term project sustainability.
He said: “What we’re seeing as an institutional investor is how the financial climate has been affecting developers over the past couple of years.
“We’ve seen various projects in the public sector, which have very good social intentions, and they’re getting postponed because of the high interest rate environment and they’re being backdated or scaled down”.
Carol Gibbs, director of housing, development & growth at Stoke-on-Trent council said: “Until we sort out the viability gap on what sites the council can potentially offer and what a developer can buy off them from an affordability point of view – we’re never going to get there.
“Costs and the viability gap are getting bigger and bigger and for Stoke-on-Trent, a highly deprived area, viabilty is a huge barrier.
“Practically every site is full of mines and shafts across the city. We’re filling that before we’re even able to get developers on board and it’s a huge issue.
“To bridge the gap we’re applying for external grants wherever we can and we’ve got a Homes England partnership – just to get the sites just so they’re ready. Some of those sites we’re talking up to £6m before they’re even development ready”.
It’s a “perfect storm,” says Michael Moore, operations director of Vistry.
“Regulations are changing, down to the specifics of building control and inspections, which complicates getting projects approved and ready for the market. On top of that, we’re facing a labour shortage, especially since the industry’s workforce is ageing, with fewer young people entering the field. When we try to ramp up production, the costs of labour and materials increase, worsening the viability issue.
“With the partnerships model, we commit early on to fixed values on large regeneration schemes with housing associations or RPs, with many involving brownfield sites that need a lot of abnormals pumping into them, we’re taking that risk which is increasing more and more.
“Partners sometimes fund the land acquisition upfront and we do get access to funding for brownfield projects, which helps with cash flow. However, as soon as planning approvals get delayed, the return on investment worsens, and the project becomes less viable. It’s a perfect storm at the moment”.
Shropshire is facing a growing challenge with its ageing population. By 2050, Shropshire will grow by 61,000 people, a rise of 19% compared to 2021 with the largest rise among those aged 65+.
Mark Barrow, executive director of place at Shropshire Council said: “The reality is, the current model for purpose-built housing development is not viable, especially when you consider tax structures and financial sustainability.
Inadequate or poorly designed housing creates significant pressures for health and social care systems. This is part of a larger systemic issue, where housing impacts other policy areas as society changes fundamentally. If we only address housing in isolation, we risk missing these broader impacts on other sectors”.
“We’re working on the infrastructure side, utilities and other services to assess where new developments will take place, working on background planning, and looking for ways to accelerate and de-risk projects.
“To make this work, we need to align our resources and lean into supportive partnerships to help facilitate sustainable development”.
Eleanor Deeley shared data regarding later living that shows the savings it makes for councils.
She said: “Every bulk of 70 extra care partners that are delivered, it saves every local council about £50m over 25 years. That’s looking at in terms of the cost of care, but that doesn’t include the amount of housing that’s freed up. On that saving basis, it’s approximately 800k per annum”.
Workforce Shortages and Attracting Talent to Construction
A recurring challenge in the regeneration sector is the shortage of skilled labour, impacted by an ageing workforce and declining interest among younger generations in construction careers.
Jake Fellows, managing director at Equans said sustainable development is being held back due to jobs, skills, training and capacity in the sector.
He said: “Several factors drive sustainable output in the construction sector, particularly planning and viability. These two areas are crucial, but the lack of stability in both makes the sector less attractive. As a result, construction is often seen as an unstable career path, which means schools, colleges, and universities struggle to promote it as an exciting and viable industry for students”.
Adam Willetts, associate director at Urban Splash believes that “even if all the developers here got planning approval tomorrow, many projects wouldn’t be ready to move forward immediately. Viability is a major issue right now, alongside planning, and there’s hope that with interest rates potentially coming down, debt markets might become more favourable.
“Planning is one hurdle, but there’s also the issue of construction capacity. There are challenges around sourcing skilled labour and securing contracts. With around two million sub-contractors across the country, not all of them are focused on building housing, which adds to the bottleneck”.
Labour costs are continuing to rise due to the limited number of skilled workers available says Michael Moore.
He said: “In the supply chain, people know that work is coming, and they’re eager for it. Prices are already creeping up even before the projects begin, which makes it challenging to manage costs and secure outputs.
“A bigger concern is attracting new talent into the industry. Skill levels are declining as the workforce ages, and with around two million people currently in the sector, this number is expected to decrease over time. We need strategies to make construction more appealing to young people and bring them into the industry”.
The Role of ESG and Sustainable Development in Regeneration
ESG considerations are increasingly influencing investment strategies, with a clear focus on creating sustainable and socially responsible communities.
Phoenix Group and other investors are placing more emphasis on sustainable housing initiatives that align with the UK’s climate goals.
Equans is set to deliver Europe’s first net zero carbon neighbourhood in Brockmoor, Dudley, comprising a mix of privately owned and social housing properties.
The firm is partnering with UrbanChain, a peer-to-peer energy exchange company and Dudley Metropolitan Borough Council (DMBC) to develop a Virtual Power Plant in council-owned building stock, to create a pooled energy solution in Brockmoor.
Jake Fellows, managing director at Equans, explained that projects like the one in Dudley, which leverages microgrid technology and renewable energy sources, are showcasing how urban regeneration can support carbon reduction targets while enhancing local communities.
These initiatives bring economic benefits by creating green jobs and reducing long-term energy costs for residents.
He said: “We’re pioneering a project in Dudley that enables residents to connect their photovoltaic (PV) systems and energy storage (SOC) on their properties into a basic microgrid. This system allows residents to sell excess energy to each other, and we believe this model has the potential to scale, especially with the RPs and local authorities.”
He also pointed out that the current model in the UK transfers risk without a long-term strategy. The lack of consistent policy can discourage investment at the grassroots level, creating barriers to the growth and scaling of sustainable housing initiatives.
To meet the ambitious goal of building one million new homes in the UK, he said it’s essential to develop a sustainable model that includes reliable, long-term planning and support.
The discussion made it clear that sustainable urban regeneration requires more than just financial investment; it needs long-term policy alignment, community-centred planning, and an engaged and skilled workforce.
For sustainable growth, industry stakeholders, local authorities, and investors must continue working together to create resilient developments that meet the UK’s housing and climate goals.
