Local authorities struggling to meet planning deadlines despite collecting £200m in additional fees from developers
Local authorities are increasingly relying on additional payments from developers to resource the planning process, while delays continue to hold up decisions on new housing, new research from the Home Builders Federation (HBF) and Paragon Bank reveals.
Between 2022 and 2025, councils responding to a Freedom of Information request received an average of almost £600,000 each through Planning Performance Agreement (PPA) fees.
The new report uses data from a Freedom of Information exercise to assess the scale of income local planning authorities receive through PPAs. Of the eighty-five responses received from local councils, 12 received more than £1m through PPA fees over the last three years. The City of London received the highest amount during this period, taking home almost £5m.
PPAs are intended to provide a framework through which applicants and local authorities can agree how complex planning applications will be managed, including key tasks, milestones, responsibilities, resources and timescales.
However, the report warns that continued capacity pressures within local planning departments are contributing to PPAs being used increasingly as a means of securing dedicated resources to progress applications.
Where an alternative timeline is agreed through a PPA, an application is no longer measured against the standard statutory determination period. Growing reliance on these agreements, alongside Extensions of Time (EoTs), can therefore make headline planning performance statistics less representative of the length of time applicants actually wait for decisions.
The routine use of EoTs and PPAs should not be viewed as a substitute for addressing these underlying issues.
The consequences of these delays are particularly acute for SME home builders, which have fewer sites across which to spread the financial cost of delays. Repeated exposure to these costs can make SME developers less willing or able to pursue future schemes. Over time, that risks driving experienced developers from the market, limiting housing delivery.
The findings come against a backdrop of persistent staffing shortages across local planning authorities. Previous HBF research shows that 90% of council planning departments are now operating below full capacity, with an estimated 2,660 additional planning officers needed across England and Wales. This is a 20% increase from previous research a year earlier.
To address these issues, the report calls on government to:
- Ensure transparency by requiring local planning authorities to publish annual information on the value and allocation of PPA income received.
- Develop a more consistent national framework for PPA structures, charging schedules and service standards to reduce variation between authorities.
- Publish updated guidance on when PPAs and EoTs should be used and how realistic timelines should be agreed. Their use as a routine response to resource constraints should be discouraged.
- Continue investing in the recruitment, retention and training of planning officers, specialist consultees and technical experts to address the underlying capacity challenges that contribute to delays.
Neil Jefferson, chief executive at Home Builders Federation said: “The planning system needs to provide certainty, transparency, and timely decisions if we are to increase housing supply, but persistent capacity constraints are making that increasingly difficult.
“Planning Performance Agreements have an important role to play in helping manage complex applications, but they should not be relied upon to make up for wider capacity shortages in the planning system. Additional fees cannot become a substitute for a planning system that is properly staffed and equipped to deliver.
“With the government’s housing targets requiring a significant increase in delivery, we need sustained investment in planning departments alongside greater transparency over how additional fees are being used, and how PPAs should be used. A properly resourced and consistent planning system is essential to giving businesses chance to successfully increase housing delivery.”
Neal Moy, managing director at Paragon Development Finance said: “This research highlights an issue that many developers we work with regularly experience. When planning timelines become unpredictable, the impact is felt throughout the development process: developers are forced to commit additional resources for longer periods, which creates greater uncertainty for lenders around delivery programmes and funding timelines. Over time, this dampens confidence to invest and ultimately slows the pace of housing delivery.
“Planning Performance Agreements have an important role to play, particularly on complex applications, but they should complement a well-resourced planning system rather than compensate for capacity pressures – which is why we’re backing the HBF’s recommendations.”