Smaller housebuilders are poised to benefit from sweeping reforms announced by the government aimed at simplifying the planning process, reducing regulatory burdens and expanding access to land and finance.

The measures, unveiled by deputy prime minister and housing secretary Angela Rayner, are part of a broader effort to deliver 1.5 million homes across the country, a key milestone in the government’s Plan for Change. The reforms are designed to support SME developers, whose market share has dwindled significantly since the 1980s when they were responsible for delivering around 40% of new homes.

The current planning system, critics say, places disproportionate hurdles on small developments. A 10-home project must navigate the same bureaucratic process as a 100-home site, leading to delays and increased costs that often deter smaller firms from building.

FAILED STATUS QUO

Rayner said: “Smaller housebuilders must be the bedrock of our Plan for Change to build 1.5 million homes and fix the housing crisis we’ve inherited – and get working people on the housing ladder. For decades the status quo has failed them and it’s time to level the playing field.”

Central to the changes is a streamlining of planning processes for minor developments of up to nine homes, which will now bypass planning committees and be assessed directly by trained planning officers. These small projects will also face reduced Biodiversity Net Gain (BNG) requirements, allowing for quicker approvals.

A new category for ‘medium’ sites, defined as those between 10 and 49 homes, will also be created. These sites will benefit from simplified regulations, including a proposed exemption from the Building Safety Levy and eased BNG rules, making it more feasible to incorporate environmentally friendly features.

SMALLER DEVELOPERS

To further support SME builders, Homes England will allocate more of its land exclusively to smaller developers. In addition, a new National Housing Delivery Fund, details of which are expected at the upcoming Spending Review, will provide long-term financial instruments such as revolving credit facilities and lending alliances.

The reforms will also pilot a Small Sites Aggregator initiative in Bristol, Sheffield and the London Borough of Lewisham. Based on a model created by Lloyds Banking Group’s Social Housing Initiative, the pilot aims to unlock underused urban plots for development, particularly for social rent housing, while attracting private investment.

EXCITING PARTNERSHIP

Charlie Nunn, chief executive of Lloyds Banking Group, welcomed the pilot: “This exciting partnership between the public and private sectors will increase investment at pace into the new, genuinely affordable homes that are needed across the UK.”

Additional support for SMEs includes £100 million in accelerator loans, part of a previously announced £700 million extension to the Home Building Fund. A further £10 million will help local authorities hire specialists to speed up environmental assessments, while a £1.2 million PropTech Innovation Fund will support digital solutions for site delivery.

The planning committees themselves are also set for reform. The government will consult on a new national scheme of delegation that will shift the majority of minor and technical applications away from councillors and into the hands of professional planners. This change, ministers say, will ensure that elected members focus on the most significant and complex proposals.

DEVIL IN THE DETAIL

Neal Moy, managing director of development finance at Paragon Bank, said: “Whilst the devil will be in the detail, this is a positive step and will be welcomed by SME developers that find themselves caught up in a highly bureaucratic and under-resourced planning system that favours larger developers.”

“Planning has been the number one barrier identified by SME developers for years,” he added. “That shows what’s possible when funding and planning are aligned, but it’s a drop in the ocean of what we know could be achieved with sensible and pragmatic legislative reform.”

The proposed planning reforms are open for consultation, including a review of BNG regulations for minor, medium and brownfield developments, and a rethinking of how biodiversity requirements will apply to nationally significant infrastructure projects. New measures on BNG will come into force in May 2026.

The government also reaffirmed its commitment to training 120,000 new apprentices, including within the construction sector, as it seeks to build the workforce needed to deliver its housing ambitions.

With planning reform now firmly on the agenda, attention will turn to the Spending Review later this year, where the scope and scale of new financial backing for SME builders will become clearer.