The amount of unspent developer contributions to planning authorities intended to fund essential local infrastructure has risen 9% in two years, reaching £9bn, according to a report from the Home Builders Federation (HBF).

The HBF said the figure, including £3bn held for more than five years, was the result of a freedom-of-information survey, which received responses from 243 local authorities in England and Wales.

It added that money paid as part of planning agreements for new housing developments included £6.6bn from Section 106 agreements and more than £2.2bn raised through the Community Infrastructure Levy (CIL).

The HBF said that an extra £800m of unspent contributions had been added since the last time it reported on the issue in mid-2024.

The federation said the average council held £19m in unspent Section 106 infrastructure contributions and £13.9m in unspent CIL funds; the London Borough of Tower Hamlets holds the most, with over £260m of unspent contributions, nine times the national average.

HBF chief executive Neil Jefferson said: “The balance of unspent developer contributions rising to £9bn in local authority accounts provides further evidence of a capacity crisis in local government and should be a major cause of concern for local communities and ministers.

“This money should be funding schools, healthcare, affordable housing and other essential local infrastructure, yet billions sit idle, in some cases for over five years. Investment in new housing brings huge economic and social benefits, but far too many of these advantages are going unseen by local communities.

“It’s great that government has, in recent weeks, taken some action in supporting local authority funding, but the underutilisation of developer contributions is a damning indictment on the ability of local councils to deliver for their communities.

“Urgent action is needed to ensure this money is spent promptly, supporting communities, improving local services and driving growth.

“New homes should be providing benefits for both new and existing residents, but the ongoing failure of local government to use this money is undermining support for new housing and threatens the government’s ambition to build 1.5 million homes this parliament.”