New research highlights how stretched local planning departments and unpredictable decision times are creating further challenges for SME housebuilders and the wider custom and self build sector.
Local authorities are continuing to struggle with planning deadlines despite collecting millions of pounds in additional fees from developers, raising concerns about the cost and reliability of the planning system.
Research by the Home Builders Federation (HBF) and Paragon Bank found that councils responding to a Freedom of Information request received an average of almost £600,000 each in Planning Performance Agreement (PPA) fees between 2022 and 2025. Of the 85 local authorities that responded, 12 received more than £1m over the three-year period, with the City of London collecting almost £5m.
PPAs allow developers and planning authorities to agree how complex applications will be managed, including the resources required, key milestones and expected timescales. However, the report warns that ongoing staffing and capacity pressures are driving greater reliance on these agreements to secure dedicated resources.
The growing use of PPAs, alongside Extensions of Time (EoTs), can also make official planning performance figures less representative of the actual time applicants wait for decisions. Where alternative deadlines are agreed, applications are no longer assessed against the standard statutory determination period.
SME housebuilders face mounting pressure
Planning uncertainty can have significant financial implications for smaller developers, including those delivering custom and self build opportunities. With fewer sites across which to spread costs, SME housebuilders are particularly vulnerable to delays that tie up capital, extend project programmes and increase financing costs.
Neal Moy, managing director at Paragon Development Finance, said unpredictable planning timelines force developers to commit resources for longer, creating greater uncertainty for lenders around delivery programmes and funding.
“Over time, this dampens confidence to invest and ultimately slows the pace of housing delivery,” he added.
Calls for greater transparency and investment
The HBF and Paragon Bank are calling on the Government to introduce greater transparency around PPA income, establish a more consistent national framework for agreements and charging schedules, and issue clearer guidance on the use of PPAs and EoTs.
The research also recommends continued investment in recruiting, retaining and training planning officers, specialist consultees and technical experts to address the underlying capacity shortages.
Neil Jefferson, chief executive of the HBF, said sustained investment in planning departments was essential if the Government was to meet its housing delivery ambitions.
“A properly resourced and consistent planning system is essential to giving businesses a chance to successfully increase housing delivery,” he said.
For the custom and self build sector, a more predictable and adequately resourced planning system could help reduce the uncertainty facing smaller businesses, support investment in new projects and improve the prospects of bringing more homes forward.
