A new report by the Home Builders Federation (HBF), Planning for Small Sites, finds that the barriers for Small- and Medium- Enterprise housebuilders are growing, worsening the housing shortage
UK SME housebuilders are increasingly struggling with delivering houses, as in 2024, only 17,000 homes were approved on small sites, well below the average of 35,000.
Total planning permissions granted on sites of 150 units or fewer has dropped from nearly 20% in 2008 to 6-8% now.
A variety of factors are affecting UK SME housebuilders
The HBF report highlights that planning delays, increasing costs, and complex regulations are making many small schemes unviable for builders. This in turn is exacerbating or preventing progress in the housing crisis.
Furthermore, a staggering 94% of applications miss the statutory determination deadline, with an average of 30 weeks to get a committee decision, and another 21 weeks to secure formal permission. On average, applications decided at committee take an average of 53 weeks, 10 weeks longer than delegated decisions.
13% of sites took longer than two years to secure permission, and five schemes took more than three years. Planning fees and obligations reach approximately £2m per site.
SMEs are in danger of “being unable to stay in business”
The report further found:
- 98% of SMEs report implementation challenges with Biodiversity Net Gain, whilst 94% report application delays as a result of BNG
- From autumn 2026, the Building Safety Levy is expected to add thousands of pounds of additional cost to build per home, regardless of height
- The recent HM Treasury Landfill Tax consultation would see rates for most of the waste from home building sites rising by 3000%, potentially adding around £15,000 per home and, in some cases, over £50,000 as a de facto new levy on new homes
- A lack of interest in Section 106 Affordable Housing from Registered Providers is delaying the delivery of around 8,500 units
- Nutrient neutrality acts as a major blocker, with SMEs unable to manoeuvre around this using expensive strategic mitigation schemes or land for offsetting
- The Planning and Infrastructure Bill will allow LPAs to fully recover application costs through higher fees, which MHCLG admits could disproportionately impact SME developers by significantly increasing the cost of minor applications
Neil Jefferson, chief executive at the Home Builders Federation, said: “SME home builders play an invaluable role in delivering homes for the UK, helping to train the workforce and boosting local economies.
“With a large proportion of the homes that SMEs build falling within the small site category, the findings from this report show that as a group they are in real danger of not just being unable to deliver homes but being unable to stay in business.
“While Government wants to assist SMEs, the barriers our members are facing is substantial, and needs intervention to reverse the trends of declining small site approvals we are seeing.
“If we are to deliver new housing at the levels Government is aspiring to, it is critical that developments and businesses of all sizes are supported and that SMEs are given the opportunity to grow.”
The report can be read in full here.
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