A Bold “Get On and Build” Message from Whitehall
The UK government has unveiled plans to fine house builders who delay starting construction after receiving planning permission. Branded the “Delayed Homes Penalty,” the proposal is part of a broader effort to accelerate housebuilding and tackle the housing shortage. Under the plan – announced by Deputy Prime Minister Angela Rayner in late May 2025 – councils in England would gain powers to penalise developers that fail to start or progress building on schedule. Housebuilders would be required to commit to delivery timelines when applying for planning consent and submit annual progress reports to “keep them on track.” If a project falls more than 10% behind its agreed schedule without a valid reason, the local authority could impose fines amounting to “thousands of pounds per unbuilt home,” with the money going directly to the council to fund planning services. In extreme cases, persistent failure to build out sites could even lead to councils reclaiming the land in the public interest and blocking developers from future planning permissions.
The message from government to developers is clear. Prime Minister Keir Starmer took to social media to warn: “If you promise homes, you have to build them,” vowing that penalties will be introduced for those who “don’t build them fast enough.” Rayner struck a similar tone, declaring “No more sites with planning permission gathering dust for decades while a generation struggle to get on the housing ladder.” The intent is to clamp down on alleged “land banking” – where developers secure permissions but stall on building – and to spur quicker delivery of new homes. As part of the initiative, large developments (over 2,000 units) would by default be required to include at least 40% affordable housing, a mixed-tenure approach which the government says can “nearly double” build speeds on big sites. These measures feed into an ambitious target to deliver 1.5 million homes by the end of the current Parliament, a goal ministers frame as essential for fixing Britain’s housing crisis and making home ownership achievable for more working families.
Local Authorities Welcome Powers – With Caveats
Local councils, which often bear the brunt of community frustration over stalled housing projects, have broadly welcomed the proposed powers. The Local Government Association (LGA) – representing councils – has been “pushing for [these] changes” and said “too often [councils] are frustrated when developers do not build the homes they have approved.” From a local authority perspective, if a housing scheme is granted permission but left unbuilt, it not only fails would-be residents but also ties up land that could be used for much-needed homes. The ability to fine dilatory developers or even seize back undeveloped sites is seen as a tool to ensure planning permissions actually turn into roofs over people’s heads.
However, council leaders also urge that fines must be set at an effective level and used sensibly. The LGA emphasized that any penalties should incentivise build-out rather than simply become a cost of doing business. They caution that without proper calibration, fines could be too low to change behavior – or so high they risk scaring off development altogether. Additionally, councils note that while holding private developers to account is important, authorities need support to build more homes themselves as well. In other words, empowering councils to penalise slow builders is just one side of the coin; on the other side is giving the public sector the capacity (through funding or policy support) to directly deliver social and affordable housing where the market isn’t meeting local need. This balanced view from local governments reflects a hope that the new rules will unblock stalled sites, but also an understanding that deeper issues in the planning and housing system must be addressed in parallel.
“Housebuilders Don’t Sit on Land,” Industry Hits Back
Developers and industry stakeholders have not minced words in response – and many are critical of the assumption that builders are wilfully dragging their feet. The Home Builders Federation (HBF), which represents Britain’s major housebuilders, strongly pushed back against the notion of rampant “land banking.” HBF Chief Executive Neil Jefferson pointed out that “numerous independent reviews have concluded that home builders do not delay build out, not least the CMA’s market study, published only last year.” In Jefferson’s view, the idea that large builders sit on approved land for no reason doesn’t hold water. Developers only recoup their investment once homes are built and sold, so there is little financial sense in idle delays after navigating a costly and bureaucratic planning process. “Having purchased land and navigated [planning], there is no reason not to build and sell homes,” Jefferson said, flatly refuting the premise that big builders intentionally stall projects.
From the HBF’s perspective, if housing delivery is slow, the blame lies elsewhere – and the government’s focus should be too. “Ministers need to focus on the actual reasons as to why home building levels are flatlining,” Jefferson argued, “which have largely been ignored – the lack of government support for first-time buyers that is suppressing demand, and the dearth of housing associations in the market for affordable homes.” In other words, the federation believes current housing output is being held back more by market conditions and policy gaps than by developer inaction. They cite the end of programmes like Help to Buy and a broader drop in first-time buyer activity (due to higher interest rates and economic uncertainty) as key factors reducing demand for new homes – which in turn makes builders cautious about how fast they build. Likewise, a shortage of partners to take on affordable housing obligations (for example, housing associations) can slow down projects that require a mix of market and affordable units. Rather than wielding a stick of fines, HBF suggests the government might need to offer more carrots – such as reviving buyer incentive schemes or investing in affordable housing delivery – to actually boost construction and sales volumes.
Trade bodies for smaller developers share similar reservations. Richard Beresford, chief executive of the National Federation of Builders (NFB), insists that genuine housebuilders “build homes. They do not sit on land they can deliver.” If land with permission isn’t getting built, he says, it’s often because the ones holding it aren’t traditional builders but landowners or speculative land traders looking to flip sites rather than develop them. “Landowners, land promoters and developer-investors might sell permissions,” Beresford explains, “but this is because they are not the ones building the site out and making the finances work.” In short, the federation draws a distinction between land speculation and actual housebuilding – cautioning politicians not to conflate the two. It doesn’t help, Beresford adds, that the government appears to be acting on a premise that its own recent investigations didn’t fully endorse. (Notably, a government-commissioned review in 2018 led by Sir Oliver Letwin “found no evidence that speculative land‑banking is part of the business model for major house builders, nor that this is a driver of slow build out rates” – a conclusion often cited by developers to defend their practices.)
Conclusion
In summary, the “fine the builders” plan is a high-profile gambit by the UK government to get homes built quicker, and it has sparked a lively debate between authorities and the development industry. Councils and many in the public see it as a long-needed measure to hold developers accountable and curb alleged land hoarding – an opportunity to finally unlock stalled housing for the benefit of communities and buyers. Developers and builders, meanwhile, feel they are being scapegoated for a complex problem, arguing that they’re not the villains here and that deeper reforms (to planning red tape, infrastructure delays, and housing finance) are where the real solutions lie. Both sides share the ultimate goal of more homes for people who need them, but they differ on how to get there.
For a UK mortgage broker’s clients, the takeaway is clear: housing policy is changing fast, and it could influence everything from home availability to affordability. Whether these fines end up improving supply or complicating delivery, one thing is certain – homebuyers will be watching closely. At Quick Mortgages, we’ll continue to help clients navigate these changes and secure the best mortgage deals in a shifting market.
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