London, UK – 28th May 2025 – The UK government has introduced sweeping reforms to streamline planning rules, reduce regulatory burdens, and provide financial support for small and medium-sized enterprise (SME) housebuilders, aiming to accelerate the construction of thousands of homes and meet the Plan for Change target of 1.5 million new homes. Historically, small sites of 10 homes have faced the same planning hurdles as developments with 100 or more, contributing to a sharp decline in SME market share since the 1980s, when they delivered 40% of UK homes and trained 8 out of 10 construction apprentices. These reforms seek to reverse this trend, fostering competition and supporting economic growth.
Key measures include faster planning decisions for small sites (up to 9 homes) with streamlined processes and reduced Biodiversity Net Gain (BNG) requirements, handled by planning officers rather than committees. A new “medium site” category for developments of 10–49 homes introduces simpler rules, proposed exemptions from the Building Safety Levy, and eased BNG regulations. Homes England will release more land exclusively to SMEs, and a new National Housing Delivery Fund, with details forthcoming at the spending review, will provide financing options such as revolving credit facilities and lending alliances.
A Small Sites Aggregator pilot, based on Lloyds Banking Group’s Social Housing Initiative, will be launched in Bristol, Sheffield, and Lewisham to aggregate small brownfield sites, attract private investment, and deliver social rent homes, addressing housing shortages and temporary accommodation challenges. Additional support includes £100 million in SME Accelerator Loans, £10 million for councils to hire environmental specialists, and a £1.2 million PropTech Innovation Fund to enhance small site delivery through data tools. The government also plans to train up to 120,000 new apprentices, including in construction, to bolster workforce capacity.
The revised National Planning Policy Framework is projected to drive housebuilding to its highest level in over 40 years, contributing £6.8 billion to the UK economy by 2030.
In an official press release, Angela Rayner, Deputy Prime Minister and Housing Secretary, stated, “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.”
Charlie Nunn, CEO of Lloyds Banking Group, added, “We strongly welcome the government’s announcement today that it will pilot the Small Sites Aggregator in Bristol, Sheffield and Lewisham. Through the Social Housing Initiative, we’re proud to have helped ignite this innovation in housing development and finance – unlocking the small, brownfield sites in our communities which are lying empty yet have immense potential to provide good quality homes in our towns and cities. 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.”
Jeremy Gray, Head of External Affairs, Federation of Master Builders, noted, “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 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 by members as it reduces planning hurdles, enabling them to scale up their businesses.”
Paul Rickard, CEO of Pocket Living, emphasized, “For the first time in many years, we’re seeing clear signals that an administration recognises the critical role SME housebuilders play in tackling the housing crisis. We’re delighted to see several of the recommendations we’ve worked with the Government on reflected in today’s announcements. SMEs can be disproportionately affected by policy and support targeted specifically at SMEs will help to reverse the decline of our sector, help level the playing field, and once again make SMEs the backbone for high quality local housing delivery across the nation.”
Richard Beresford, Chief Executive of the National Federation of Builders, said, “In 2018, NFB helped write the NPPF policies on small and medium sized sites and since that time, lobbied for a ‘Medium’ sized definition of between ten and 50 homes. We are incredibly grateful to the government for considering our recommendation because SMEs don’t just deliver organic growth on infill, brownfield and within communities, but are the competition, workforce capacity and innovation that keeps the housebuilding and construction industry healthy. Governments have always spoken strongly about helping SME builders but action has been thin on the ground. By acknowledging that many SMEs build on sites of between ten and 50, the ‘Medium’ sized site definition creates an opportunity to help them directly. This is the strategic step that SMEs desperately needed, and we thank the government for working with and listening to industry.”
