Red tape slashed for SME housebuilders

Smaller and medium-sized housebuilders will benefit from loosening government regulations, to speed up development on smaller sites across the UK.

Gaining permission to develop is notoriously difficult for SMEs, as they have to jump through the same hoops as much bigger developers, which has led to a drop in their market share since the 1980s, when SME builders delivered 40 per cent of the country’s homes.

The government has consequently introduced new proposals that aim to remove the red tape blocking smaller developers from building new homes, including faster decisions for small sites (up to nine homes) which will see them benefit from streamlined planning and eased Biodiversity Net Gain (BNG) developments.

A new ‘medium site’ category will be introduced for sites with ten to 49 homes, again allowing them to benefitting from simpler rules and few costs, including a proposed exemption from the Building Safety Levy and simplified BNG rules.

Homes England has additionally pledged to release more of its land specifically for SMEs, and the Small Sites Aggregator pilot in Bristol, Sheffield and Lewisham will unlock sites that would otherwise be left undeveloped, as well as attracting private investment to build new social rent homes.

Further support announced today (28th May 2025) includes £100 million in SME Accelerator Loans to help smaller firms grow, £10 million to allow councils to pay for more specialists, and a £1.2 million PropTech Innovation Fund which will support innovation in support site delivery, by using new data tools, for example.

Deputy prime minister and housing secretary, Angela Rayner said: “Smaller housebuildres 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.”