Rayner’s delayed homes penalty will slow down building, says the Housing Forum

The government’s proposals on build-out rates could be “counter-productive” and slow down the pace of new housebuilding rather than speed it up, the Housing Forum (THF) has said.

As part of its aim to see 1.5 million new homes built by 2029, the government is proposing to introduce a new statutory build-out reporting framework. However, the THF fears the proposed framework would “pit developers and councils against each other”.

The government is currently consulting on requiring developers to state the speed at which new housing will be delivered when they apply for planning permission. Potential penalties under the proposals include fines for late delivery imposed by local authorities, and the refusal of future planning applications.

THF’s director of policy and public affairs, Anna Clarke, said: “Having consulted with our members from across the housing sector – including councils, housing associations, developers and legal firms who advise the sector – we believe that attempting to impose financial penalties on housebuilders for slow build-out rates would be counter-productive to the intended policy ambition of speeding up housebuilding.”

The proposed measures “would pit councils and developers against each other in costly and slow legal battles, with councils expressing fears that this could turn into a mud-slinging match between councils and developers over who is to blame”, Clarke said.

She added: “It may be politically attractive to blame developers for slow build-out rates, but when digging down into individual causes, it is usually the case that different factors interact, or that more than one factor is holding development up simultaneously. Third parties – such as the Highways Agency or Building Safety Regulator – are often responsible for delays.”

The consultation on the government’s build-out rate proposals launched in late May and closes on 7 July.

>> See also: Housebuilders will face ‘delayed homes penalty’ if they fail to build to promised timeframes, Rayner announces

The THF said the government had “done a great deal to support housebuilding since coming to power less than a year ago” with reforms to planning, £39bn for Affordable Housing and the newly announced National Housing Bank. But it warned that “these new reforms undermine some of this positive work.”

Housing secretary Angela Rayner said in May that the proposed “delayed homes penalty” will be a “last resort” for councils to use where a developer has fallen “10% or more” behind the build-out schedule agreed in its planning permission.

The THF said increasing the risk attached to building through the build-out rate framework would deter lenders to the sector, and increase the price of credit. This in turn would increase costs, and reduce the viability of much-needed affordable housing.

It pointed out that the framework would cause a significant financial hit for  housing associations who own sites that are currently stalled because of the viability of housing given increased construction costs.

The cross-sector membership body also highlighted increased difficulties in delivering complex, higher-risk brownfield sites. 

It also warned that housebuilders would become more cautious, less ambitious and fall back on less innovative or environmentally friendly construction methods in the interests of speed. Meanwhile, legal costs could be increased for both councils and developers as they argue who is responsible for slow build-out rates.