Deputy Prime Minister and Housing Secretary Angela Rayner said housebuilders must stop leaving sites half-finished and deliver homes faster.
New Government rules mean developers must agree to delivery timeframes before they get planning permission.
They will also have to send annual progress reports to councils.
Rayner said: “This government has taken radical steps to overhaul the planning system to get Britain building again after years of inaction.
“In the name of delivering security for working people, we are backing the builders not the blockers.
“Now it’s time for developers to roll up their sleeves and play their part.”
Rayner added: “We’re going even further to get the homes we need. No more sites with planning permission gathering dust for decades while a generation struggles to get on the housing ladder.
“Through our Plan for Change, we will deliver 1.5 million homes, fix the housing crisis and make the dream of home ownership a reality for working people.”
Developers who do not build out sites on time or who get planning permission just to trade land could face a delayed homes penalty.
The penalty will be paid to local planning authorities and could be thousands of pounds per unbuilt home.
Councils are also getting new powers to buy up sites that have been left undeveloped in the public interest, and developers who sit on land could be stopped from getting future planning permissions.
Councillor Adam Hug, spokesperson for the Local Government Association (LGA), said: “We are pleased the Government has acted on the LGA’s call for it to be easier for councils to penalise developers and acquire stalled housing sites or sites which have not been built out to timescales contractually agreed, ideally with the recovery being made at pre-planning gain prices.
“Local government shares ambitions to boost housebuilding and work hard with communities and developers to deliver new sites.
“Too often they are frustrated when developers do not build the homes they have approved.
“While intervention of this sort is a last resort, this move is crucial to help ensure meaningful build out of sites.”
Hug added: “The ability to apply a ’Delayed Homes Penalty’ is a power that councils have been asking for and means that local taxpayers are not missing out on lost income due to slow developers, but it must be set at a level that incentivises build out.
“Private developers have a key role in solving our chronic housing shortage but they cannot build the homes needed each year on their own.
“Ahead of the spending review, we have also set out the measures needed to empower councils to also be able to build more affordable, good quality homes quickly and at scale.”
Dave Seed, managing director at Qube Residential, said: “While I welcome the Prime Minister’s push for faster housebuilding, however, the focus must remain on the people who will actually live in these homes. Speed is important, but so is quality and affordability.
“Too often, rushed developments lack proper infrastructure and placemaking. Building quickly means little if homes aren’t sustainable for families and individuals.
“I support holding developers accountable, but the real goal must be creating lasting infrastructure and not just hitting quotas.”
