Small builders face big planning hurdles, new report finds

Small and medium-sized home builders are grappling with significant obstacles, with planning delays and government roadblocks, a new study has found.

A new report, State of Play 2024/25, paints a vivid picture of the struggles and opportunities facing the UK’s small and medium enterprise (SME) home builders with a staggering 51% of SME builders report waiting over a year for planning permissions.

Produced by the Home Builders Federation (HBF), Close Brothers Property Finance, and Travis Perkins, the report welcomes recent reforms but SME developers are urging for more decisive action to remove barriers and fast-track approvals to meet the nation’s housing needs.

What is the planning problem?

Planning delays and government policies are stifling progress for both small-scale developers and aspiring self-builders, according to a new report.

The State of Play 2024/25 highlights the struggles faced by SME builders, who are critical in addressing the housing crisis and creating diverse communities. With over 51% waiting more than a year for planning permission and only 1% receiving approvals within three months, the system appears mired in inefficiency.

The challenges aren't limited to SME developers. For self-builders, navigating the same planning bureaucracy can feel like an insurmountable task. Rising costs, biodiversity requirements, and nutrient neutrality rules only add to the burden, with delays pushing projects back months – or even years.

Rising costs only add to the pain – 56% report a 30% jump in planning expenses over the last three years. Local authorities are struggling, too, with 90% of builders doubting councils can handle the new biodiversity net gain requirements, introduced this year.

“Planning delays and rising costs are crippling smaller builders, yet they play a vital role in addressing our housing crisis,” says Neil Jefferson, CEO of the HBF. He added, “Addressing the chronic underfunding of local planning departments and simplifying regulations is essential for getting Britain building again.”

Navigating economic and regulatory roadblocks

Economic turbulence and new rules around nutrient neutrality and biodiversity pose further obstacles.

Nearly 90% of builders call these barriers to growth, as approval processes drag on. Political opposition to development – so-called “Not In My Back Yard” (NIMBY) attitudes – also spiked, with 78% citing it as a major challenge, up from 69% in the last report.

“The challenges are stacking up. It’s no wonder two-thirds of SME builders say it’s harder now than five years ago,” says Phil Hooper, CEO of Close Brothers Property Finance.

What can be done?

While the government has introduced some planning reforms, including planning changes and recruiting 300 more planners, builders say more is needed.

Suggestions from the HBF report include homebuyer incentives for energy-efficient new builds (such as a new Help to Build/Buy scheme) and better support for affordable housing delivery. Without such measures, the housing pipeline risks grinding to a halt, as 80% of builders face difficulties selling their affordable housing allocations under Section 106.

“We need to make it easier for small builders to thrive – they’re critical to creating diverse, vibrant communities,” says Ben Todd, Managing Director at Builders Merchant, Travis Perkins.

As the clock ticks on ambitious housing targets, the question remains whether the government can turn promises into tangible progress to alleviate the housing crisis.