Delayed Homes Penalty

The Delayed Homes Penalty is a policy that was proposed in the Policy paper "Planning Reform Working Paper: Speeding Up Build Out" which was published 25 May 2025 by the government. The paper proposes various methods to facilitate the speeding up of house building and give councils greater powers. One of these proposals is the Delayed Homes Penalty, which would be a last resort measure available for local authorities where a developer has agreed a build out schedule in their planning permission but falls materially (10% or more) behind without a good reason. The policy will require primary legislation to come into force and will only apply to future planning permissions.

The government aims to accelerate housing development and promote diverse tenure models, the Delayed Homes Penalty would apply to developers who fall significantly behind agreed build-out schedules without valid reasons. As a last resort measure, it would apply to larger sites with pre-agreed delivery plans and transparent monitoring. The developers would need to justify delays and where caused by external, defined factors, the penalties might not apply. Otherwise, they could be fined per delayed home, based on house prices or local tax impacts. The approach seeks to balance accountability with clarity, and the further consultation aims shape its implementation to avoid discouraging development.

The Deputy Prime Minister at the time through the announcement urged housebuilders to ‘Get on and Build':

“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.”

The housing spokesperson for the Local Government Association, Cllr Adam Hug went on to say:

“We are pleased the Government has acted on the LGA’s call for it to be easier for councils to penalise developers and acquire stalled housing sites or sites which have not been built out to timescales contractually agreed, ideally with the recovery being made at pre-planning gain prices. 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.

“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.”

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