Government is planning to simplify planning and boost funding to help small builders deliver more homes faster, support jobs and tackle Britain’s housing shortage.
The UK government has announced a comprehensive package of reforms designed to support small and medium-sized housebuilders (SMEs), aiming to simplify planning rules, ease regulatory burdens, and improve access to finance. The move is part of the government’s broader Plan for Change, which targets delivering 1.5 million new homes, creating jobs, and driving economic growth across every region of Britain.
For years, smaller housebuilders have faced significant challenges, including complex planning systems and disproportionately heavy regulatory demands that apply equally to small developments as to large-scale projects. The new reforms seek to level the playing field by tailoring rules and processes more appropriately for smaller sites, helping these builders — crucial contributors to local economies and training hubs for construction apprentices — to expand their market share and build more homes.
Streamlined Planning
One of the central changes focuses on the planning process. Minor developments of up to nine homes will now benefit from faster decisions, with expert planning officers empowered to approve applications rather than relying on slower, more politicised planning committees. This should accelerate the delivery of thousands of homes on smaller sites nationwide.
For sites between 10 and 49 homes, a new ‘medium site’ category will introduce simpler rules and reduced costs. This includes a proposed exemption from the Building Safety Levy and a more straightforward approach to Biodiversity Net Gain (BNG) requirements, balancing environmental protection with development needs.
These measures aim to reduce delays and administrative hurdles, encouraging smaller builders to take on projects that have often been unviable under the current system. According to government figures, SME builders once delivered 40% of Britain’s homes in the 1980s, but their share has since declined sharply. The new reforms are intended to reverse this trend and inject much-needed competition and diversity into the housing sector.
Financial Boosts
The government is also increasing financial support for SME housebuilders. Homes England will release more land exclusively to smaller firms, providing them with crucial opportunities to acquire development sites. Meanwhile, a new National Housing Delivery Fund—details of which will be announced in the upcoming Spending Review—will offer long-term finance options such as revolving credit facilities and lending alliances tailored for SMEs.
A pilot project called the Small Sites Aggregator will launch in Bristol, Sheffield, and the London Borough of Lewisham. This initiative aims to unlock small, otherwise unviable plots of land by pooling resources and attracting private investment. Drawing on a successful model developed by Lloyds Banking Group’s Social Housing Initiative, the pilot seeks to boost the supply of social rent homes, create local jobs, and tackle the housing shortage at a grassroots level.
“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.”
Angela Rayner, DPM and Housing Secretary
Charlie Nunn, CEO of Lloyds Banking Group, welcomed the pilot: “We strongly support the government’s plans and are proud to have helped spark this innovation. Unlocking small, brownfield sites with immense potential is key to delivering affordable, quality homes in communities across the UK.”
Additional Support
To further assist smaller builders, the government has pledged £100 million in SME Accelerator Loans, part of a £700 million extension to the Home Building Fund announced last December. This fund is designed to help SMEs overcome barriers in accessing traditional loans and invest in growth.
An additional £10 million will be allocated to councils to hire environmental specialists to expedite ecological assessments, which often delay developments. Meanwhile, a £1.2 million PropTech Innovation Fund will support new technologies that improve the efficiency and certainty of small site delivery, such as data tools that help builders make informed investment decisions.
Reducing Bureaucracy
The government also outlined plans to modernise planning committees. Under these proposals, elected councillors will focus on larger and more contentious developments, while expert officers handle the majority of minor or technical applications. This reform is expected to cut delays and reduce the repetitive back-and-forth over technical details, allowing local councils to save time and resources.
Public consultations on these reforms and related environmental regulations, including Biodiversity Net Gain for small and medium sites, have been launched and will run for eight weeks.
The housing reforms come alongside a government commitment to train up to 120,000 new apprentices across various sectors, including construction, to ensure the industry has the skilled workforce it needs to meet rising demand.
Deputy Prime Minister and Housing Secretary Angela Rayner 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. For decades the status quo has failed them, and it’s time to level the playing field. Today, we’re taking urgent action to make the system simpler, fairer, and more cost-effective, so smaller housebuilders can play a crucial role in our journey to get Britain building.”
The government’s ambitious reforms signal a decisive shift towards empowering local builders, cutting red tape, and harnessing innovative financing to unlock Britain’s housing potential, aiming to meet the urgent need for more affordable homes across the country.
