Government’s Warning To Developers

On 25 May 2025, the Government launched both a consultation on implementing measures to improve build out transparency and a working paper on planning reform to speed up building out rates for residential developments (the proposals). It has stated that “too many developments secure planning permission then are either stalled or not built out quickly to the frustration of Local Planning Authorities and their communities”.

It proposes a three step process for some developers to follow for securing planning permission. In short, they will be required to:

• Submit a ‘build out statement’ along with their planning application, which will detail relevant timescales
• Serve a ‘commencement notice’ to the Local Planning Authority (LPA) before starting any building work
• Report annually to the LPA on progress until completion.

The Government is looking to penalise those who do not conform to the new rules, by passing legislation to introduce possible financial penalties and implementing further provisions introduced in the Levelling-up and Regeneration Act 2023 (LURA).

Why is this happening now?

The proposals follow the current Government’s promise to deliver 1.5 million new homes by 2029, and fall in line with its stance to get Britain building. It has also advised on its future intentions, explaining that this is the first step in a series of measures it hopes to introduce in order to improve the speed of residential development in the UK.

Deputy Prime Minister and Housing Secretary Angela Rayner has said that the 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. Now it’s time for developers to roll up their sleeves and play their part.”

What are the proposed new penalties for non-compliance?

There appear to be four main areas under consideration.

Firstly, the consultation notes that that the Government is inviting views in its working paper on granting LPAs the power to charge a ‘Delayed Homes Penalty’ to developers who “fall materially behind pre-agreed build out schedules”. The possible fine(s) would be paid straight to LPAs.

Secondly, Section 70C of the Town and Country Planning Act 1990, as amended by section 113 of LURA, grants powers to LPAs to decline to determine planning applications from housebuilders who are connected to previous, unfinished or unreasonably slow developments and the consultation advises that the Government intends to implement this “new power”. This will apply to connected parties who have taken over sites with the benefit of a planning permission that has not been progressed at a satisfactory pace in the LPA’s opinion.

Thirdly, the working paper states that the Government is committed to implementing reforms to the operation of completion notices introduced under section 112 of LURA. Completion notices require developers to complete their development within a certain period of time if the LPA considers it will not be completed in a reasonable time, otherwise the planning permission will cease – a form of “use it or lose it”. The proposed reforms would replace the need for the Secretary of State’s consent for a notice with an appeals mechanism.

Fourthly, the BBC has reported on the notion of the Government acquiring land from developers who have ‘sat’ on planning permissions for too long, through possible Compulsory Purchase Orders (CPOs) which allow public authorities to acquire land without consent of the landowner. The working paper confirms that this is the Government’s intention, stating that the aim is for secondary legislation to be implemented later this year which would allow conditional confirmation of CPOs; tied to developments being progressed within certain agreed timescales. The CPO powers could then be triggered if the delivery timescales are not met.

What does this mean for developers?

The Government is looking to implement the new Build Out reporting framework rules outlined in the consultation, from April 2026. However, it seems the intention is that the reporting framework will only impact larger scale developers, as the proposed plans are currently only applicable to developments of 50 units or more, according to the consultation. However, some of the other changes may apply more widely.

It is expected that these changes will significantly impact how some developments are planned, phased and reported on and housebuilders should be prepared. Developers caught by the new build out framework, will be required to commit to a time frame before the LPA will grant planning permission, and the LPA will require annual updates on the build progress. Organisation and accurate record keeping will therefore be key to a happy relationship and good progress on sites.

Although the Government is only looking to impose the build out framework on larger development sites at the moment, it has made it clear that this is a first step in trying to boost build out rates in the residential development world. Therefore, future consultations could possibly affect all housebuilders and this should be anticipated.

Financing opportunities

On a positive note, the MHCLG has just announced the creation of a National Housing Bank which they say “will be able to act as a consistent partner to the private sector, bringing the stability and certainty that housing developers and investors need to make delivery happen. It will also support SMEs with new lending products and enable developers to unlock large, complex sites through infrastructure finance”.  Let’s hope it provides some developers with a little comfort that they will be supported through these challenging times with appropriate financing opportunities for development projects. Details on this are still to be provided.

It is clear that the current Government wants to see greater accountability from housebuilders. In response, housebuilders should be prepared for a raft of changes in the industry and offer transparency and responsiveness whilst navigating through these complex transitions.

We would encourage our clients to respond to the consultation – click here.

Please get in touch with our expert Real Estate and Planning team at Thomson Snell & Passmore to assist with any questions or queries you may have.