Thousands of new homes could be delivered faster on small sites across England under a major government shake-up of planning rules and financing – a move designed to restore the fortunes of SME builders and speed up housebuilding.
Announcing the measures today, 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.”
Currently, a site of just 10 homes faces the same regulatory hurdles as a development 10 times that size. The government said this imbalance has contributed to a long-term decline in SME housebuilders, whose market share has plummeted from 40% in the 1980s to a fraction of that today – despite the fact they provide local employment and train eight in 10 construction apprentices.
Under the proposals, minor developments of up to nine homes will benefit from accelerated decisions made by planning officers rather than committees. These small schemes will also see eased Biodiversity Net Gain requirements. A new “medium site” category – developments between 10 and 49 homes – will be introduced with lighter-touch rules, including a proposed exemption from the Building Safety Levy and simpler BNG obligations.
In a further bid to empower local developers, Homes England will release more land exclusively to SMEs. Meanwhile, a new National Housing Delivery Fund – to be confirmed at the next spending review – is intended to support longer-term financing, including revolving credit facilities and lending alliances tailored to smaller firms.
The government is also piloting a Small Sites Aggregator programme in Bristol, Sheffield and the London Borough of Lewisham. Based on Lloyds Banking Group’s Social Housing Initiative model, the scheme aims to unlock underused brownfield plots and channel private investment into new social rent homes.
Charlie Nunn, chief executive of Lloyds Banking Group, said: “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.”
In tandem with the planning reforms, a raft of financial and technical support has been announced to help SMEs scale up. These include £100m in SME Accelerator Loans as part of a £700m extension to the Home Building Fund, £10m for local authorities to hire more environmental specialists, and a £1.2m PropTech Innovation Fund to advance small site development through technology and data tools.
Planning committees are also in line for reform. Local councillors will in future focus on significant schemes and leave more routine approvals to professional planners. Once a development is approved in principle, technical details will no longer need to repeatedly return to committee – a shift expected to speed up delivery and reduce pressure on council planning teams.
The government said the broader package builds on recent planning reforms, including the new National Planning Policy Framework, which is forecast to deliver the highest level of housebuilding in over 40 years and generate £6.8bn for the UK economy by 2030.
The changes coincide with a new commitment to train up to 120,000 apprentices, including many in the construction sector, to ensure the industry has the workforce needed to meet ambitious housing targets.
Melanie Leech, chief executive, British Property Federation, said: “To get anywhere near 1.5m new homes by 2029, reversing the decline of SME builders must be a key objective for the Government and Ministers should be commended for acting. But solving the housing delivery challenge is bigger than SMEs alone, which is why we also need the volume builders, housing associations and build to rent developers to play their part, as well as a pragmatic approach to tacking the viability challenge.
“Therefore, we are pleased to see Government considering targeted exemptions from the Building Safety Levy and Biodiversity Net Gain requirements. We recognise the importance of funding for building safety and biodiversity standards – but know that the cumulative impact of the various charges imposed on new developments is creating a viability crisis. Government is right to reconsider them where they are hampering new housing delivery and also explore the benefits of PropTech in identifying and unlocking opportunities.
“Likewise, the potential for smaller-scale schemes to be determined by planning officers will free up planning committee time, allowing council decision-makers more time to focus on larger, more complex planning applications, hopefully leading to better decisions.”
Image: James Feaver/Unsplash
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