The return of the small house builder?
More homes from small and medium sized builders will be essential to meet the Government's 1.5 million new homes target
New measures aimed at revitalising the small and medium sized (SME) housebuilding sector has been announced by MHCLG with the aim of supporting this group who will be essential to solving Britain’s housing crisis. The low number of homes built by smaller builders in comparison to both other similar economies and historically in the UK means unlocking more homes from SME house builders will be essential.
Commenting on the announcement 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.”
Key highlights in the announcement include:
Streamlined planning processes for developments of under 10 and under 50 homes
Exemptions from burdensome regulations for SMEs, such as elements of Biodiversity Net Gain and the Building Safety Levy
New funding and land release via Homes England, including a £100 million SME Accelerator and a proposed National Housing Delivery Fund
A pioneering Small Sites Aggregator pilot in Bristol, Sheffield, and Lewisham to unlock underused urban land for housing and community regeneration
This reform package sits within the wider context of the government’s “Plan for Change,” which aims to deliver 1.5 million homes while boosting economic growth, creating local jobs, and expanding homeownership opportunities for working families and young people.
More builders, more new homes?
The government will be hoping this is exactly the kind of bold, targeted intervention to deliver more SME built homes the sector has been crying out for. For too long, the government argues, smaller housebuilders have been shut out by a planning system built for volume developers. They point to local builders knowing their communities, employing local people and supporting training through apprenticeships as other benefits.
The reforms recognise the crucial factor that smaller sites can and should be part of the housing solution. Unlocking these sites provides an alternative to large scale developments delivered by the big house holders and injects vitality into town centres and suburbs alike.
Another important change is the strategic use of public land and financial levers to support SME builders. The proposed National Housing Delivery Fund, combined with the £100m in SME loans and land release from Homes England, will give smaller builders the long-term confidence and working capital they need.
In addition, the Small Sites Aggregator pilot is a promising development. Modeled on successful social investment initiatives, it shows a willingness to innovate at the intersection of policy, finance, and social value.
In short these announcements are not just supposed to be a nod to SMEs but government’s aim is to empower them as key players in the housing market’s future.
How will the reforms go down?
This announcement follows on from other announcements where government has taken steps to address previously identified problems in the housebuilding sector since it was elected last year: Planning reforms, large scale development through new towns, more funding for affordable housing, support for community led housing speeding up delivery of sites with planning permission and now supporting smaller housebuilders.
If implemented effectively and alongside other changes to support housing delivery it could help deliver a more diverse, competitive, and resilient housing market. On the negative side other government policies, most notably the increase in employer’s national insurance, may impact on house builders’ costs and ultimately the number of homes they will build
Will the measures work? We should be looking out for the following as potential signs of a resurgence in SME housebuilding
A measurable increase in small-site planning approvals within 12 months
Greater uptake of finance packages, especially in areas with historically underutilised land
A slow but steady rebalancing of market share between national volume builders and locally embedded SMEs
Increased apprenticeship starts as SMEs gain the confidence to invest in skills and growth
If the planning reforms, financial tools, and land access measures stay on track, this could unlock tens of thousands of homes across England, delivered faster, with better design quality, and more deeply rooted in local needs.
After decades of decline, could this finally be the moment SME housebuilders get their renaissance? If it is that’s not just good for the housing sector, it’s good for all of us.