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 will have to commit to a delivery timeframe for a housing development before planning permission is granted. The policy would also require that housebuilders submit annual reports to councils to show their progress. If projects fall behind schedule by 10% or more without good reason, 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.

The proposals would also review compulsory purchase orders and give greater powers to councils to determine the types of tenure on projects and intervene on sites where housebuilding is stalled. Those deliberately sitting on land without building the homes promised, could see those sites acquired by councils where there is a case in the public interest and they could be 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 not progressing as quickly as they could be. It will support delayed sites and sites which are progressing more slowly than they should be by leveraging government resources and fostering collaboration between key stakeholders. The policy will require primary legislation and will only apply to future planning permissions.

Part of the government research informing its proposals has been looking 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 improve build-out rates across England, strategies must address actors listed below:

• 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.

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