"For the government, the property industry and the nation, doing nothing is not an option"
- Toby Lambert - MiTo Land
Forty years ago, according to the HBF, SME housebuilders’ share of the market was 40%; today it is just 10%. This represents a significant threat to the country’s ability to deliver the required number of homes, let alone meet the government’s ambitious housing targets, as new entrants and small firms have proved fundamental in contributing to upswings in housing supply.
The government clearly recognises the importance of SME housebuilders: in its recent planning reform working paper, Speeding Up Build Out it outlines a strategy to support the growth of SME developers building on small sites. It addresses key barriers, including delays in planning, regulatory burdens, the availability of suitable sites and access to finance.
Separately, the government’s Reforming Site Thresholds working paper considers the potential easing of Biodiversity Net Gain (BNG) requirements for smaller sites.
Such a move would bring about considerable benefits. Recent research by the HBF, based on a survey of housebuilders and a Freedom of Information request from local authorities, found that 98% of SME builders find implementing BNG a challenge. Furthermore, a Chartered Institute of Ecology and Environmental Management survey reported that a considerable majority of ecologists (84%) experienced BNG causing ‘major problems’ for small sites, with a further 14.9% citing ‘minor problems’. Specifically, ‘difficulty in on-site delivery’ is a major issue for 86.4% of respondents.
And the reality is that the difficulty in delivering BNG on smaller sites is disproportionate to the number of homes they deliver. A recent Freedom of Information request by Wildlife and Countryside Link revealed that 609 hectares of off-site land have been set aside for nature recovery, compared to just 93 hectares on-site.
On-site provision is less than 13% of the government’s forecast. Furthermore, with the cost of acquiring BNG credits varying across the country, it means smaller schemes in some areas have been rendered unviable.
So, what else can the government do to ease the burden on SME housebuilders?
Reforming Site Thresholds considers options to introduce new development thresholds to unlock smaller or medium-sized sites. In summary, the three principles are:
1. Moving to a more proportionate planning system;
2. Establishing clearer categories of development and;
3. Providing greater upfront certainty on planning requirements.
We believe these measures should be just the start if the government is to usher in new entrants to the SME market. Any business, whether they’re starting out or have years of experience, needs transparency and consistency before they invest.
We know from experience that the s.106 process can be protracted, thus increasing costs and causing delays and that this disproportionately affects SMEs. We believe that by giving more powers to expert planning officers to decide on smaller applications (defined as 10 units or fewer) is long overdue and will help streamline the process for all involved.
We are strong advocates of providing more land and financing options for SMEs, with Homes England playing a vital role and a new National Housing Delivery Fund which will support long-term finance options.
For the government, the property industry and the nation, doing nothing is not an option. The housing crisis shows no signs of abating: only c.225,000 homes gained full planning consent in the year to March 2025, according to the latest estimates from Glenigan and the Home Builders Federation. This is down 8% compared to the previous year and well below the 367,000 new homes per annum called for by the government’s most recent calculation of housing need.
Revising the BNG requirements is just the start of attempting to streamline the planning process if the government is serious about trying to build 1.5 million homes by the end of this Parliament. But despite that, it’s important to find a way of successfully integrating our homes with nature, given the overwhelming benefits to our mental and physical health and in a way that brings certainty and transparency for all concerned.
Addressing BNG for smaller sites is important, but it addresses just one aspect of the problem. Even if I were able to wave a magic wand and consent to every single planning application, I doubt the UK possesses enough skilled labour to deliver these homes, but that’s a whole other article!
