The Government has introduced sweeping reforms to simplify planning rules, reduce regulatory burdens, and expand financial support for small and medium-sized (SME) housebuilders.
The changes aim to speed up construction on smaller sites and reinvigorate a sector that once delivered 40% of new homes but has seen its share diminish significantly since the 1980s.
Under the current planning system, small developments face the same complex requirements as large-scale projects, making it difficult for smaller builders to begin work.
The new measures are designed to reverse this trend, boosting competition and helping to deliver the Government’s target of 1.5 million new homes.
To accelerate development, the Government will introduce faster planning decisions for minor developments of up to nine homes.
These projects will benefit from streamlined processes and relaxed Biodiversity Net Gain (BNG) requirements.
Decisions will be handled by expert planning officers rather than committees, reducing delays.
A new category for ‘medium sites’ – developments of 10 to 49 homes – will also be created.
These sites will face simplified regulations and could be exempt from the Building Safety Levy.
The BNG rules will also be eased to promote biodiversity while keeping development viable.
Support for SME builders will expand through greater access to public land and new financing options.
Homes England will release more of its land exclusively to SMEs, and the upcoming National Housing Delivery Fund will provide long-term financial support such as revolving credit facilities and lending alliances.
Additionally, a Small Sites Aggregator pilot will be launched in Bristol, Sheffield, and the London Borough of Lewisham.
This initiative, inspired by Lloyds Banking Group’s Social Housing Initiative, will unlock underused land for new social rent homes, attract private investment, and generate local employment.
Deputy Prime Minister and Housing Secretary Angela Rayner emphasised the importance of smaller builders in solving the housing crisis.
She 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.
“Today we’re taking urgent action to make the system simpler, fairer and more cost effective.”
Changes will also be made to modernise local planning committees.
Elected councillors will shift their focus to large-scale developments and leave technical or small-scale approvals to trained planning experts.
Once a development is approved in principle, it will no longer be delayed by repeated committee reviews of technical details, streamlining the process further.
The Government is also providing targeted support to accelerate small-site development.
This includes £100m in SME Accelerator Loans from the extended Home Building Fund, £10m for local councils to hire specialists for faster environmental assessments, and £1.2m through the PropTech Innovation Fund to support technology that improves small-site delivery.
These reforms are part of a broader government effort to modernize the planning system.
The recently revised National Planning Policy Framework is projected to drive housing construction to its highest level in over 40 years and contribute £6.8bn to the UK economy by 2030.
Lloyds Banking Group CEO Charlie Nunn welcomed the Small Sites Aggregator pilot, noting its potential to transform underused brownfield land into quality housing.
Nunn said: “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.
Neal Moy, Paragon Bank development finance managing director, 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, preventing them from getting spades in the ground, with costs and time soaring, so action needs to happen sooner than later to ensure they can accelerate housing delivery.”
“Last year, Paragon Bank surpassed £3bn of lending since 2018, which has supported the development of around 13,000 new homes. 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.”
