Developers that fail to build out sites in agreed time may face penalties under new government plans

Developers could also be locked out of future permissions by councils.

The penalty would be a last resort measure available to councils where a developer has agreed a build out schedule in their planning permission but falls materially (10% or more) behind it, without a good reason.

The proposal will require primary legislation and only apply to future planning permissions. 

The government is also testing a new requirement for large sites to be mixed tenure by default, as those with more affordable homes tend to be built out faster.

The working paper, called Speeding Up Build Out, is being published alongside a technical consultation on requiring transparency and accountability measures for build out rates on housing sites.

Using powers introduced in the Levelling-up and Regeneration Act 2023, the consultation includes proposals to require developers of 50 or more homes to provide a build out statement with their planning application, a commencement notice when they start development, and an annual progress report tracking build out progress. 

The working paper also confirms that the government will implement a new power introduced by the 2023 act that allows acquiring councils to include a direction in Compulsory Purchase Orders (CPOs) to remove ‘hope value’ from compensation assessments.

Alongside this, it will implement the reforms to completion notices in the act, which allow councils to remove planning permission after a specified timeframe if development is unlikely to be completed within a reasonable period.   

The government said thousands of new homes will be delivered faster thanks to the changes, ensuring developers “do not leave sites half-finished for years”.  

It said developers deliberately sitting on “vital” land, without building the homes promised, could see their sites acquired by councils where there is a case in the public interest and also be stripped of future planning permissions.

Angela Rayner, housing secretary and deputy prime minister, said: “This government has taken radical steps to overhaul the planning system to get Britain building again after years of inaction. 

“In the name of delivering security for working people, we are backing the builders not the blockers. Now it’s time for developers to roll up their sleeves and play their part. 

“We’re going even further to get the homes we need. No more sites with planning permission gathering dust for decades while a generation struggle to get on the housing ladder. 

“Through our plan for change, we will deliver 1.5 million homes, fix the housing crisis and make the dream of home ownership a reality for working people.”  

Adam Hug, housing spokesperson for the Local Government Association (LGA), said it was “pleased” the government has acted on its call for it to be easier for councils to penalise developers and acquire stalled housing sites.

He said: “Local government shares ambitions to boost housebuilding and work hard with communities and developers to deliver new sites. 

“Too often they are frustrated when developers do not build the homes they have approved. While intervention of this sort is a last resort, this move is crucial to help ensure meaningful build out of sites.”

He said the ability to apply a delayed homes penalty is a power that councils have been asking for and “means that local taxpayers are not missing out on lost income due to slow developers, but it must be set at a level that incentivises build out”. 

“Private developers have a key role in solving our chronic housing shortage but they cannot build the homes needed each year on their own. Ahead of the Spending Review, we have also set out the measures needed to empower councils to also be able to build more affordable, good quality homes quickly and at scale,” Mr Hug said. 

An impact assessment of the Planning and Infrastructure Bill earlier this month estimated that the changes could benefit the economy by up to £7.5bn over the next 10 years.