War Chest

Nine billion is a really, really big number. It’s not the UK's housing deficit. It's not the infrastructure funding gap. It's not even a government budget line. It's the amount of developer contributions, which is essentially money paid by housebuilders as a direct condition of planning permission, currently sitting unspent in local authority accounts across England and Wales. Nine billion pounds, earmarked for schools, roads, affordable housing, healthcare and community infrastructure, that’s been collected, banked, and that’s it. This isn't speculation, it's the findings of the Home Builders Federation's most recent Freedom of Information exercise, published in March 2026, based on responses from 243 local authorities. The figure has risen 9%, around £800 million, since mid-2024 alone. As our sector battles to get shovel-ready developments moving, in this week's blog, we ask ourselves, what’s going on?

Developer contributions come in two main forms, and the ones we tend to see primarily are Section 106 agreements. In layperson's terms, these are site-specific obligations negotiated during the planning process and vary depending on the project's size. So, for instance, a developer building 200 homes might contribute to a new school, a GP surgery, or an off-site affordable housing fund. The other instance considered in the cashflow assessment is the Community Infrastructure Levy (CIL). This is essentially a standardised charge per square metre of new development, designed to pool resources for wider strategic infrastructure.
Of the £9 billion sitting unspent, £6.6 billion is Section 106 money and £2.2 billion is CIL. The average council holds £19 million in unspent S106 contributions, though the average is distorted by a small number of extreme cases. The London Borough of Tower Hamlets, for instance, holds over £260 million in unspent contributions. Nine times the national average, on a per-household basis. More troubling than the total is the age profile. Around £3 billion of those funds has been held for more than five years despite many agreements explicitly requiring deployment within that window. Some councils have acknowledged holding money for over two decades. Contributions paid in connection with developments that have long since been completed, occupied, and forgotten.

To put these numbers into context: £2 billion is sitting unspent in education contributions, a figure equivalent to the entire annual Department for Education budget for school rebuilding, maintenance and repair. To put things into perspective, that same sum could fund 126,000 new school places. Meanwhile, £700 million earmarked specifically for affordable housing remains undeployed, at a time when housing affordability sits at historic lows across much of the country. The HBF found that £320 million in healthcare contributions is unspent, including £128 million already handed over to NHS Integrated Care Boards, who, in some instances, have been refused or simply ignored when requesting access to their own earmarked funds.

These aren't abstract line items. They represent real infrastructure that real communities were promised in exchange for accepting new development on their doorstep. The deal was: you get the houses, we get the schools, the roads, the doctors' surgeries. That deal is not being honoured, and the situation is tipping from frustrating into genuinely counterproductive. One of the most common grounds for local authority objection to new development applications is infrastructure pressure, the argument that local schools are full, roads are at capacity, and GP lists are closed. Those objections, in many cases, are being made by the same councils sitting on hundreds of millions of pounds specifically intended to address infrastructure pressure. The HBF has explicitly called for existing unspent contributions to be factored into planning decisions. If a council holds a £30 million unspent education fund, the argument that a new development would overload local schools becomes considerably harder to sustain.

The other major concern the report raises is that transparency could well be heading in the wrong direction. Councils are legally required to publish annual Infrastructure Funding Statements detailing how contributions will be spent. In 2020, 90% met the statutory deadline. By 2025, that figure had dropped to 75%. The HBF attributes this to chronic understaffing and limited capacity, but the effect is that communities have less visibility into the money raised specifically on their behalf.

So what’s the lesson in this?

We operate in the space where capital meets shovel-ready residential development, and the SME housebuilders we work with are, in many cases, doing exactly what the country needs them to do: bringing forward housing on sites with planning and funding in place and ready to build. Capital only creates value when it moves, and this is a principle of our sector. Development finance that sits in a bank account, however well-intentioned, doesn't build a single home, fund a single school place, or improve a single road junction. It's the deployment of funds, structured correctly, drawn down against verified progress, secured against real assets that turns financial commitment into physical outcomes. Our loans are structured around exactly that principle. Staged drawdowns tied to independently verified build milestones.

The £9 billion sitting in council accounts isn't a story about bad people, and it’s important to remember that. It's a story about what happens when systems aren't designed for deployment, when the incentives, capacity, and accountability structures that turn collected funds into completed infrastructure simply aren't there.

For investors and borrowers who want their capital working in the real economy, that's a cautionary tale worth taking seriously.

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