Unfinished housing developments

The need to build new homes is a common topic of political interest. However, local news reports have highlighted concerns that developers may not finish housing developments or the infrastructure necessary to support them, such as roads.

The issue of unfinished housing developments was raised in a parliamentary debate in October 2022. A December 2022 debate focused on the related issue of unadopted roads and the lack of facilities for new housing estates.

This briefing covers England and the devolved administrations.

Planning issues: Permission and obligations

To build new housing, planning permission from the local planning authority (LPA) is required. Planning permission expires within three years in England and Scotland (or five years in Wales and Northern Ireland) if construction has not started. Once construction has started, however, there is little an LPA can do to force it to be completed.

Powers available to local planning authorities

There are certain powers at LPA’s disposal, however, that they can use to encourage developers to finish building developments. LPAs can:

• issue a completion notice threatening to revoke planning permission.
• attach conditions to planning permission, such as a time limit on when construction must start. LPAs cannot attach conditions requiring a development to be carried out in its entirety and to be completed.
• require a landowner to carry out clean-up works if the condition of an unfinished housing development is affecting the amenity of an area.
• as a last resort, use compulsory purchase powers to buy a development. There must be a compelling case in the public interest, and these powers must be confirmed by the relevant Secretary of State.

It is up to the LPA whether to use these powers; constituents cannot compel them to use them.

Delivering infrastructure

To mitigate concern about the potential impact of a proposed development on local infrastructure, an LPA can negotiate an agreement with a developer (called a “section 106 agreement” in England). A developer will agree to deliver certain obligations, such as building a new road or paying the LPA money to do so. If a developer does not deliver the infrastructure or payments they agreed to deliver, an LPA can:

• carry out the works itself and recover the costs from the developer.
• seek a court injunction to require the developer to comply with their agreement (in England, Wales and Northern Ireland).

Planning reforms (England)

The Levelling Up and Regeneration Act 2023 strengthens some of the powers that LPAs in England have to deal with unfinished housing developments. Once the government has brough these provisions into force, developers of residential developments will be required to notify the LPA when they start construction and provide annual updates on development to the LPA.

The 2023 Act will also give LPAs in England the power to refuse to consider planning applications from developers who have not completed previous development or carried it out unreasonably slowly.

Unfinished roads

MPs and news reports have highlighted instances where residents move into new houses, and the developer declared bankruptcy before completing the roads serving the homes. These roads may be in a poor state. Because the council are reluctant to ‘adopt’ these roads and become legally responsible for their maintenance, and residents can be left liable for often expensive road upgrades.

Powers available to local authorities

Councils are not obliged to adopt an ‘unfinished’ road, or to bring it up to adoptable standard, unless a developer makes certain agreements and has paid financial bonds to the council. However, councils in England and Wales can:

• make a voluntary advance agreement with a developer to adopt a prospective road, once built, under section 38 of the Highways Act 1980 (potentially including a bond).
• require a developer to pay a mandatory Advanced Payment Code (APC) bond (which can be used to make up roads if a developer defaults on the building work) under sections 205 to 218 of the 1980 Act.

The government has published a guidance document on road adoption for use by councils, developers and house-buyers in England. It advises house-buyers to check if a section 38 agreement is in place when purchasing a new-build home. It also provides advice on what to do in case of a dispute.

Frontager liability to bring roads up to standard

If there is no section 38 agreement or APC in place, a council can bring a road up to adoptable standard in agreement with the frontagers (the people who own property ‘fronting’ the road), under sections 205 to 218 of the 1980 Act. This means that the road is adopted by the council.

However, the frontagers would be required to pay for and agree to such works, making this “an unpopular and potentially complex process”.

Devolved administrations

The Highways Act 1980 also applies in Wales, although the Welsh Parliament can amend the law for Wales. The Welsh Government has published a good practice guide for developers and councils, aimed at reducing the creation of unfinished roads in Wales.

Further legal and historical background can be found in the Library briefing Private, or ‘unadopted’ roads in England and Wales.

Different legislation applies in Scotland and Northern Ireland although many of the same problems around unfinished roads exist there as well.

Other issues: Building standards and utility connections Standards for building work

Minimum standards for building work are set out in the building regulations. When carrying out building work, a developer must seek and obtain building control approval from the local authority (or a registered private-sector organisation or individual in England and Wales).

The local authority will assess whether the building regulations are met and, on completion of the building work, issue a certificate. Their role is to ensure that technical standards are met, however, not to monitor build quality or supervise the construction process. The responsibility to ensure that a home is built to required standard and that there are no defects ultimately rests with those carrying out the work (that is, the developer or the builder).

If building work contravenes the building regulations, a local authority can prosecute the person who carried out works and/or require a building owner to fix faulty building work. It is up to the local authority whether to use these powers; constituents cannot compel them to use them.

Connections to utility supply

The responsibility for making sure that a housing estate is connected to utility services, such as water, sewerage, gas and electricity, and for making sure that works meets set industry standards rests with the property developer.