‘Get on and build!’: How might SME developers fare in the wake of sweeping housing reforms?

‘Get on and build!’ was the message from the Deputy Prime Minister and Housing Secretary, Angela Rayner, last month, with the announcement of new measures to keep housebuilders ‘on track’ and ensure their involvement in the government’s plan to build 1.5 million homes over the next parliament. Amongst the measures announced were plans to penalise developers who delay for too long in building out consented sites, and to commit developers to agreed timeframes before planning permission is granted. However, the insinuation that hung over these announcements, that housebuilders have been deliberately sitting on vacant land and ‘dragging their heels’ of late, has been met with frustration by many in the industry. 

Both Neil Jefferson, chief executive at the Home Builders Federation, and Richard Beresford, chief executive of the National Federation of Builders, have responded reminding the government that building and selling homes is, frankly, exactly what housebuilders want to be doing to see a return on their investment. For the most part, it has been the myriad of other factors (limited mortgage availability and interest rates suppressing demand, the supply and cost of labour, and the costs and timescales involved in the adoption of utilities and infrastructure, to name a few) that has caused delays. Forcing housebuilders to sign up to timelines that they don’t feel able to commit to with certainty, may only have the opposite effect of deterring developers from beginning the planning process, when the risk of expensive penalisation outweighs the risk of getting started. 

That said, the larger housebuilders, who have the benefit of financial stockpiles and the flexibility to change focus between multiple sites being built out at one time, will inevitably be able to tolerate this new challenge better than the smaller players in the market. It has been a tragedy of the industry that SME developers have not been able to weather the storms of turbulent housing markets in the past few decades, and now account for only 10% of new home builds, as opposed to 39% in 1988. Recent years in particular have intensified the trend; following the effects of Covid, a constant turnaround in housing ministers and consecutive rises in interest rates, two-thirds of SME housebuilders have reported that it is harder to deliver on projects now than it was 10 years ago. 

It is fortunate, then, that a number of the government’s other measures to ‘Get Britain Building’ are designed to unlock smaller developments and give SME housebuilders the boost they need. These include: 

• a £100 million loan fund to be available to smaller builders (as part of the £700 million extension to the Home Building Fund which was announced in December)
• a proposal for development sites of fewer than 10 homes to benefit from simplified planning processes, with planning officers to take decisions rather than full planning committees
• the creation of a “medium site” category for developments of 10 to 49 homes, which would also face fewer costs and could be exempt from the Building Safety Levy
• the release of certain sites exclusively to small developers by Homes England 
• a new National Housing Delivery Fund, which will provide revolving credit options and partnerships with alternative lenders, in an effort to open up access to longer-term finance solutions 

In contrast to the heat surrounding Starmer’s “Get on it with it!” post on X last month, the response to these wider measures has been largely positive. The ‘State of Play’ report published by the Home Builders Federation in December 2024 showed the planning system and lack of land availability to be two of the major blockers restricting SME developer growth, whilst the smallest SMEs (building 1-10 homes a year) continued to cite access to development finance as a barrier to housing delivery.  The hope, therefore, is that these reforms will bring about welcome and much needed change in the industry. Whether that is enough for the government to succeed in meeting its highly ambitious housing target, is another matter.