NFB and HBA secure major SME housebuilding reforms!
On 28 May 2025, the government has announced a package of proposals to directly help small and medium sized builders (SMEs), including a ‘Medium’ sized site definition to enable more proportionate planning requirements, streamlined planning for ‘Minor’ sized sites and more targeted support for access to land and finance.
Richard Beresford, chief executive of the National Federation of Builders (NFB), 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 (NPPF), 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.”
In their press release, the government highlighted that the current system is far too difficult for smaller builders to get spades in the ground, with small sites of 10 homes jumping through the same planning hurdles as one with 100 or more.
They also recognised that smaller firms, ‘which provide local jobs and train eight out of 10 construction apprentices, have seen their market share shrink since the 1980s, when SME builders delivered 40% of the country’s homes’.
The proposal includes:
- 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 faster decisions being taken by expert planning officers, not planning committees;
- A new ‘medium site’ category: Sites between ten to 49 homes will face simpler rules and fewer costs – including a proposed exemption from the Building Safety Levy and simplified BNG rules, making it easier to deliver biodiverse habitats on these sites, delivering a win-win for nature and development;
- 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.
- 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 that would otherwise not have been developed, while attracting private investment to build new social rent homes.
Consultations on the various proposals have now been published.
Rico Wojtulewicz, head of policy and market insight at the NFB and House Builders Association (HBA), said: “Planning reform isn’t just about permissions, it is about policy proportionality. A ‘Medium’ sized site helps rid us of the antiquated, SME damaging, Minor and Major site size definitions and creates an environment where the government can help SMEs in practice.
It is also fantastic to see ‘Minor’ site reforms, land unlocking strategies and greater appreciation of AI and digital tool opportunities. The announced proposals should also ensure finance is also easier to access because whether private or government backed money, all of it still requires full planning to be drawn down.”
On the ‘Medium’ sized site, Rico highlighted some of the conversations he has had with the government over the past seven years.
“The ‘Medium’ sized site definition has been a seven-year HBA campaign and so we are often asked how it might help SMEs. For a start it establishes a mindset of understanding development impact, so that sites of ten homes are not treated the same as those delivering 100, 250, 500 or 1,000. This means brownfield, infill and sites within communities will have a potential policy lever and Local Plan allocations may finally recognise them as vital to meet mandatory targets.
If implemented, it would make it far easier for Local Plans to allocate a percentage of sites as ‘up to ‘Medium’ sized’. We would propose 30%.
Site size definitions also ensure that regulatory regimes such as the Building Safety Levy (BSL), CIL, Section 106, planning conditions and statutory consultees, to name a few, have a site size threshold to operate more proportionately.
Policy trials, for example on Biodiversity Net Gain (BNG), can be tested at greater scales without fear of policy failure. For BNG, we hope this means gardens, fabric and site design solutions can now see a route to implementation.
Today is a win for strategic policy because SMEs build our council and self-build homes. Reduce reliance on immigration because they train the housebuilders, retrofitters and constructors of tomorrow. Provide the competition which ensures scandals do not take place, industry standards rise, and innovation becomes ubiquitous. And they spread the risk of failure for ambitious policy positions, such as the delivery of 1.5million homes.”
NFB would like to thank Civil Servants on the SME housebuilders team for pushing so hard on this long-term policy campaign. They are integral to all reforms but rarely get the recognition or credit they deserve.