Pre-planning delivery programmes and delay penalties proposed for housebuilders

The government policy paper "Planning Reform Working Paper: Speeding Up Build Out" published 25 May 2025 proposes that housebuilders would have to commit to a delivery timeframe for a housing development before planning permission is granted on a scheme. The policy would also require housebuilders to submit annual reports to councils to show their progress. If projects fall behind scheduled progress by 10% or more without good reason (as predefined external factors), the council would be able to apply a Delayed Homes Penalty. The penalty would be applied per unbuilt home, relative to value, and paid directly to the local planning authority; it may also see certain developers being locked out of future permissions by councils.

Furthermore, the proposals would review compulsory purchase orders and hand greater powers to councils to determine the types of tenure on projects and intervene with sites where housebuilding is being stalled. Those deliberately sitting on vital land, without building the homes promised, could see these sites acquired by councils where there is a case in the public interest and stripped of future planning permissions.

The New Homes Accelerator (NHA), first announced by the Chancellor on 8 July 2024, is a key component of the 1.5 million new homes target. NHA is a collaboration between the government, Homes England and the Greater London Authority, working with local authorities, developers and other key stakeholders to unblock and accelerate the delivery of housing developments that are, for various reasons, not progressing as quickly as they could be. It will support delayed sites and sites which are progressing more slowly than they should by leveraging government resources and fostering collaboration amongst key stakeholders. The policy will require primary legislation to come into force and will only apply to future planning permissions.

Part of the government research informing its proposals has been to look at what it calls the speed of build-out and reasons that affect how quickly projects progress to completion and use. It argues that to sustainably increase build-out rates across England, strategies must address certain factors (listed below) while ensuring interventions don’t compromise development viability or lead to stalled projects. It lists a number of findings that have influenced proposals:

• Faster build-out rates occur in areas with less restrictive planning systems and greater market competition, which reduces developers’ expectations of rising prices and encourages quicker construction and sales.
• High local housing demand also accelerates building, as developers can sell homes more rapidly.
• Different housing types affect delivery speed—flats, often debt-financed, are built faster but in more variable bursts than houses.
• Smaller sites, typically managed by SME developers, are delivered more quickly due to lower absorption constraints and the need for faster capital returns.
• Sites with high levels of affordable housing or mixed tenures (e.g., Build to Rent) also see faster delivery, as bulk sales to housing associations or institutional investors reduce market risk.

To respond to this, the government is developing five key strategies to boost housing delivery:

1. Planning system reforms to reduce risk and speed up approvals, inc. mandatory targets and Green Belt rules.
2. Sustainable demand will be supported through a permanent mortgage guarantee scheme, improved mortgage regulations, and strong institutional demand.
3. SME developers will be backed by addressing planning delays, regulation, site access, and finance challenges, as small sites typically build out faster.
4. Large sites will be encouraged to adopt diverse tenures, including Build to Rent and affordable housing.
5. Strategic master planning will coordinate infrastructure and land use to accelerate delivery.

On 25 May, 2025, the Deputy Prime Minister, alongside the publication of it Policy paper urged housebuilders to ‘Get on and Build', highlighting:

• That councils would get new powers to keep housebuilders on track to ensure the 1.5 million homes delivery.
• Reiterating that new housebuilding timeframes must be set before planning permission is granted.
• Fines or developers repeatedly failing to build out or using planning permissions to trade land speculatively could face a new ‘Delayed Homes Penalty’ or be locked out of future permissions by councils.
• Part of the government’s plan for change to grow the economy and deliver security for working people.

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