Rayner pledges support for SME housebuilders

Enabling faster decisions on small sites and removing obligations for projects of 10-49 homes are among the proposals as the government looks to make good on its 1.5m homes target, with consultation periods now launched.

As has been well documented, smaller housebuilders have seen market share shrink since the 1980s, when they delivered 40% of the UK’s s housing.

With the 1.5m-home Plan for Change a flagship policy of the Labour government that swept to power in summer 2024, fleshed-out proposals have now been announced and consultation processes set in motion.

These include:

• Faster decisions for small sites: minor developments of up to nine homes will benefit from streamlined planning and eased Biodiversity Net Gain (BNG) requirements, with decisions being taken by officers rather than at committee.
• A new ‘medium site’ category: sites of 10-49 homes will face simpler rules and fewer costs – including a proposed exemption from the Building Safety Levy and simplified BNG rules.
• More land and financing options for SMEs: Homes England will release more of its land exclusively to SMEs, and a new National Housing Delivery Fund to be confirmed at the spending review will support long-term finance options, such as revolving credit facilities and lending alliances.
• A new pilot to unlock small sites for SMEs: the Small Sites Aggregator pilot in Bristol, Sheffield and the London Borough of Lewisham will unlock sites. Building on a model developed by Lloyds Banking Group’s Social Housing Initiative, the Small Sites Aggregator will help tackle the housing shortage, address unviable small plots of land, and create local jobs.

Deputy Prime Minister and housing secretary, Angela Rayner said: “Smaller housebuilders must be the bedrock of our Plan for Change to build 1.5m 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.”

Further support announced today for local builders includes:

• £100m in SME Accelerator Loans to help smaller firms to grow and invest using part of the £700m extension to the Home Building Fund announced in December.
• £10m for councils to fund more specialists to speed up environmental assessments, getting spades in the ground faster.
• A £1.2m PropTech Innovation Fund to support innovation in small site delivery, for example through use of new data tools.

It comes as the government unveiled its plans to train up to 120,000 new apprentices, including within construction.

So what sort of timeline can the market expect to see work progress at? The government has published a working paper on planning thresholds for small and medium housing sites.

Consultation has been launched on BNG commitment across minor, medium and brownfield development, which will run for eight weeks.

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As part of the Planning and Infrastructure Bill, the government is also launching a new consultation on reforming planning committees. This includes detailed proposals for a national scheme of delegation which would direct most minor and technical applications to planning officers, freeing up more committee time by categorising applications into Tier A or B. Tier A applications will go to officers, while Tier B applications have the ability to be considered by committees if necessary. This will also run for eight weeks.

Further details will be announced at the Spending Review on the new National Housing Delivery Fund will provide a range of funding tools to support SMEs, including support for revolving credit facilities.

The government is making available a further £10m this financial year to help local planning authorities implement BNG, on top of £35m provided in previous years.

In addition, the government said it will consult on how to apply BNG for nationally significant infrastructure projects “to provide consistent regulations for developers – many of them who are already delivering biodiversity gains at scale”. Measures will be in place from May 2026.

Industry reactions

Jeremy Gray, head of external affairs at the Federation of Master Builders, said: “This is a big change for the planning system and one that acknowledges the hardships faced by SME house builders over the last few decades, which have resulted in their decline. The UK’s small house builders stand ready to deliver the homes Britain needs, but the planning system has stifled their growth.

“The FMB has long called for reform to the planning system to support SMEs, and so the decision to streamline requirements on sites of up to nine homes, alongside faster decision making is a positive step. The medium site designation will also be welcomed as it reduces planning hurdles, enabling small house builders to scale up their businesses. However, the small site allocation in local plans will need revisiting to fully realise the potential of small house builders. Local planning authorities will also require further investment to ensure that the system has capacity.”

Richard Beresford, chief executive of the National Federation of Builders, said: “This is a huge win for the NFB. I am immensely proud of our housebuilding members and staff for never giving up on their campaign for a ‘Medium’ sized site definition of between ten and 49 homes.

“After we helped write the National Planning Policy Framework, the next logical step was a ‘Medium’ sized definition to sit between Minor, fewer than 10 homes, and Major, ten and above. We never expected it to take seven years of lobbying but are delighted that in less than twelve months, the Labour government understood that they could not help SMEs unless planning recognised their typical
site size.

“Labour should be commended for understanding the benefits of this proposal, particularly after the Conservative government talked up their desire to help SMEs but did little to recognise their existence.”

Robbie Calvert, head of policy and public affairs at the Royal Town Planning Institute, said: “The government’s proposed reforms have the potential to unlock thousands of homes on smaller sites and energise a part of the sector that plays a vital role in local economies.

“However, we must be clear, we can only support the proposed delegation reforms if they are accompanied by the establishment of a Chief Planning Officer in every planning authority. These reforms propose a significant change to how our system works, and without strong, accountable leadership and oversight, risk undermining the integrity of the planning process.

“The decision to exempt small sites from BNG requirements is a sensible approach given the severe lack of resourcing and ecological skills available to local authorities. However, we expect the government to develop long-term solutions to ensure nature is protected and enhanced by the planning system without starving the country of economic growth.”