New rules proposed by the government today will see housebuilders penalised for failing to ‘get on and build’, while those deliberately sitting on vital land could see their sites acquired by councils.
Deputy Prime Minister and Housing Secretary Angela Rayner announced new government proposals today aimed at pushing developers to deliver on their commitments and deliver 1.5 million new homes in line with the government’s plans.
Under these new rules, housebuilders will be required to commit to delivery timeframes before they receive planning permission. They will also need to submit annual reports to councils to keep their progress on track.
Delayed Homes Penalty
Those developers who consistently fail to build out sites or who secure planning permissions purely to speculatively trade land could face a new ‘Delayed Homes Penalty’. This penalty will be worth thousands of pounds per unbuilt home and will be paid directly to local planning authorities, the government said.
In its ‘Speeding Up Build Out’ Planning Reform Working Paper, the government notes that the Delayed Homes Penalty would effectively be a measure of last resort that may be needed if builders do not sufficiently adapt and fulfil their commitments to deliver homes more quickly.
The framework for this penalty is unconfirmed, but the current structure considered by the government would see it apply only to sites over a certain size and where there is evidence of the developer falling substantially behind on a pre-agreed schedule with the local planning authority.
If a site’s progress falls to 90% or below of the agreed delivery schedule, the developer would be required to justify this slower build-out to the planning authority and if they cannot point to a reasonable external factor, they could be liable for the Delayed Homes Penalty.
The government notes that the relevant party (developer or landowner) would be charged for each home that failed to meet the build-out schedule, and that the penalty amount could be based on either local Council Tax rates or a percentage of the house price.
“It would be important in the introduction of any Delayed Homes Penalty that industry was confident in when and how this would be applied, to ensure that they did not disincentivise land being brought forward for development,” the working paper adds.
“We therefore intend to use all views expressed in response to this working paper to inform further policy development, and if the government decided to take this proposal forward, we would propose to undertake further consultation.”
Time for developers to roll up their sleeves: Rayner
In addition to the rules above, the government is also trialling a new requirement for large sites to be mixed tenure by default, placing more of a focus on affordable homes to help working families and young people to get on the housing ladder.
“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,” said Rayner.
“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.”
She noted that work is already underway through the new National Planning Policy Framework, including mandatory housing targets for councils, which aims to drive UK housebuilding to its highest level in over 40 years.
“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,” said Councillor Adam Hug, Housing spokesperson for the Local Government Association.
“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.”
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