On 25 May government published a new working paper on another element of planning reform.  This time the focus is on incentivising speedy housing delivery, and discouraging delay.  The paper looks at how to: overcome absorption constraints; and strengthen the local authority toolkit to unblock stalled sites.

Government points to the continuing reforms to the planning system (eg changes to the Green Belt covered in our March post) as one strand of the strategy to speed up building.  The other four strands are: a mortgage guarantee scheme to create a steady supply of low deposit mortgages for first time buyers; supporting SME developers building small sites that tend to have quicker build out rates; encouraging greater tenure diversity on large sites; and increasing the role of strategic master-planning with the public sector de-risking development and parcelling up land for different delivery models.

Much of the content relates to measures already incorporated into legislation through changes the Levelling Up and Regeneration Act 2023 imported into the Town and Country Planning Act 1990.  This includes taking forward: the build out reporting framework; the ability for local planning authorities to decline to determine applications from developers that have not previously built out at a reasonable rate; and the simplified completion notice process.  Government also intends to bring forward secondary legislation to allow for the conditional confirmation of CPOs.  This would allow CPO powers to be activated when a landowner fails to progress proposals within a certain period.

The working paper also includes a new concept, the “Delayed Homes Penalty” (DHP).  The DHP is designed as a last resort measure, to be used when build out on sites over a certain size is falling significantly behind the agreed schedule without reasonable justification. 

It is proposed that if delivery falls to 90% or less of the agreed delivery rate in a particular year, by reference to the pre-agreed delivery schedule, the developer will need to justify the slower build out rate to the local planning authority.  Delays not shown to be due to external factors (to be set out in national guidance) or unexpected site issues, may result in the developer being liable for the DHP.

The DHP would be charged on each home behind the pre-agreed build out schedule.  The DHP would relate to either a percentage of the house price or by reference to the local council tax rates.

It will be important for housebuilders to help shape the external factors that justify a slower build out rate.  Views on the proposals, and any wider options that could help speed up housing delivery, are sought until 7 July 2025.  As a concept though, it will be difficult to argue that DHP, the “stick”, is unfair when there are so many carrot elements bring brought forward.