Last updated: 14 November 2025
‘Land banking’ and unbuilt planning permissions explained
Key points
- There is no commercial incentive for developers to slow down the progress of development, as they only see a return on investment when homes are sold.
- Independent reviews by the Competition and Markets Authority, Dame Kate Barker, Sir Oliver Letwin and others have found that the size of land portfolios is a result of the time, complexity and uncertainty associated with the planning process.
- Estimates of ‘unbuilt planning permissions’ often double-count or fail to account for delays beyond developers’ control.
- Policy interventions that focus only on build-out rates risk reducing investment and making it harder to deliver new homes.
What is the industry’s position?
The home building industry appreciates concerns around unbuilt permissions and the need to ensure that housing requirements are being met. However, there is very little evidence to suggest that “land banking”, in terms of unnecessarily slowing down the progress of development, happens in practice.
After purchasing land and navigating the planning system, there is no rationale for delaying construction. Developers only realise a return once homes are built and sold, planning permissions expire if not implemented, and maintaining a site also involves ongoing costs. Therefore, it would be commercially illogical for a home builder to ‘sit on’ land with an implementable planning consent that is ready to build.
Rather than developers unnecessarily slowing down development, the pace of build-out depends on the functioning of various markets, such as private buyers, investor buyers, and Affordable Housing providers. Build-out rates also depend on other external factors, such as construction capacity, the planning process, and infrastructure provision (such as wastewater and electricity grid connections).
What does the evidence say about ‘land banking’?
Multiple reviews, including those by Sir Oliver Letwin, Dame Kate Barker, the Office of Fair Trading and, most recently, the Competition and Markets Authority (CMA), have concluded that developers do not deliberately withhold land from development.
Instead, these reviews concluded that the unpredictability of the planning process requires builders to maintain a pipeline of land to manage risk and ensure continuity of supply, and as such is a rational business strategy.
For instance, in its Housebuilding Market Study last year, the CMA did not find evidence that home builders are banking land in amounts or for lengths of time beyond what can be reasonably expected. The CMA stated:
“Overall, we do not consider the aggregate size of land banks and the length of time the land is held in themselves present a concern. Rather, they are likely to reflect underlying issues in the operation of the market such as the operation of the planning system and incentives driving the speed of build out.”
They warned that attempts to reduce land banks artificially - without addressing the systemic factors that lead developers to hold land - would likely reduce housing delivery.
The CMA’s study also highlighted that most developers lack the market share required to restrict output in a way that influences local prices, concluding that the second-hand housing market, which accounts for 90% of transactions, significantly constrains new-build prices.
What about Local Government Association figures on unbuilt planning permissions?
The Local Government Association (LGA) has published figures suggesting there are over 1 million homes with planning permission that have not yet been built. However, these numbers are based on flawed assumptions and often significantly overstate the number of homes that are deliverable in the short term.
Many of the permissions counted are outline permissions, which do not yet have the detailed consents required to start work. Moving from outline approval to implementable consent can take months or even years, and often involves discharging dozens - or even over 100 - planning conditions. Until these conditions are met, developers are not legally permitted to begin construction.
Other permissions included in these figures are double-counted with replacement consents - where developers have submitted revised applications for layout, design, or housing numbers, meaning earlier permissions are effectively superseded. By way of example, if a site has previously been granted planning permission for 250 new homes, but because of changes to the market or to policy at a national or local level, it has been re-planned for 300 new homes, the flawed “unimplemented planning permissions” reports will record 550 consents, of which only 300 can ever be built.
There are also significant external factors causing delays. These include unresolved Section 106 agreements, issues with nutrient neutrality regulations, delays to Building Safety Regulator approvals, slow responses from statutory consultees and inadequate infrastructure provision. In many cases, developers are actively working to bring sites forward, but are held back by delays that are outside their control.
Finally, some permissions relate to homes on sites where construction is already underway but not completed. There is a time lag of two to three years between a planning permission being granted and a home being completed and recorded in official statistics.
For these reasons, often cited estimates of unbuilt permissions do not support claims of land banking.
What is HBF calling for?
In May 2025, the Government proposed a series of measures to speed up build-out in a Working Paper and Technical Consultation. These include a build-out reporting framework and a Delayed Homes Penalty, which would allow local authorities to charge for each home which falls behind a pre-agreed build-out schedule. The proposals appear to give local authorities powers to impose unrealistic build-out timescales or to reject future applications on a discretionary basis.
HBF is calling on the Government to focus on the real root causes of slow delivery - particularly the delays, uncertainty, and complexity of the planning process - rather than introducing build-out rates interventions in isolation. Introducing penalties or enforcement measures based on build-out rates risks making investment in new sites less attractive and financially viable. This would reduce rather than increase housing supply.
To support faster build-out, action is instead needed to:
- Improve the operation of the Section 106 system, including the lack of Registered Provider buyers for Affordable Housing units and the protracted timelines for negotiation.
- Address causes of delay to getting on site, such as wastewater and electricity grid connections, and the Building Safety Regulator.
- Mitigate planning delays through proper resourcing of Local Planning Authorities and simplification of the planning process.
Where can I find more information?
- HBF’s responses to the technical consultation and Working Paper on the Government’s build-out rates proposals.
- The Competition and Markets Authority’s Housebuilding market study.
- Sir Oliver Letwin’s independent review of build-out.
If you have any questions, contact our Policy team at policy@hbf.co.uk.
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