Following the government’s announcement that it has introduced a series of last-minute amendments to the Planning and Infrastructure Bill to speed up the planning process, a report from the Home Builders Federation (HBF) lays bare the mounting barriers faced by small and medium sized home builders.
Unpredictable delays, rising costs and new levies risk pushing smaller developers out of the market, HBF says in its report Planning for Small Sites, which was published before the government announced changes to the planning bill. Produced with Quantum Development Finance and using analysis from Lichfields, the report reveals just 17,000 homes were approved on sites of between three and nine units in 2024, down from an average of 38,000 when the HBF began recording figures for its Housing Pipeline Report in 2008.
The proportion of planning permissions granted on sites of fewer than 150 units has fallen from nearly 20% in 2008 to 6-8% today. Planning delays, rising costs and increasing regulatory complexity are combining to make many smaller schemes unviable, the report notes.
‘SME home builders play an invaluable role in delivering homes for the UK, helping to train the workforce and boosting local economies’, said Neil Jefferson, HBF’s chief executive.
“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.”
Timescales facing planning applications for small sites are ‘unreasonable and unmanageable’, the report claims, with 94% of applications missing the statutory determination deadline. It takes an average 30 weeks from application to committee decision and a further 21 weeks to secure formal permission.
Applications decided at committee take 53 weeks on average, 10 weeks longer than delegated decisions. On 13% of sites, securing planning permission took over two years, with five schemes waiting over three years. Analysis of sites in various cities revealed small sites faced average planning fees and obligations of approximately £2 million per site.
While HBF has welcomed recent policy measures announced by the government to support SMEs, including introducing a medium site category and exempting developments containing fewer than 49 homes from the Building Safety Levy, it says further support is needed.
Oliver Thompson, chief executive at Quantum, commented:
“SME house builders are vital to the health of the UK housing market, yet for many of the businesses we work with, the journey from acquiring a site to delivering new homes has never been more difficult or uncertain.
“This report highlights the implications of the current planning process and illustrates that the system now demands a level of financial resilience that disadvantages SME house builders.
“While we welcome the government’s recent steps toward reform, the pace of change must accelerate. If we’re serious about fixing the housing crisis, we must fix the system and ensure SME house builders are supported.”
