UK housebuilding: a year on, what’s really changed for SMEs?

Following Birmingham City University's Centre for Future Homes hosting the 17th Housing Summit at Arup, we asked Michael Parinchy, Senior Construction Manager at Probuild360, to write a blog on the challenges facing SMEs in the UK housebuilding industry. The blog follows on from one Michael wrote a year ago, in this update he asks what’s really changed for SMEs?

Twelve months ago, I argued that our industry could be “struggling and exciting” at the same time. That still feels true—but the balance has shifted. Politically, momentum is finally behind building again. The government has reaffirmed the ambition for 1.5 million homes this Parliament and begun reshaping policy to make that plausible. For SMEs, that creates opportunity—but only if reforms bite where delivery actually happens: local plans, small-site allocation, and day-to-day casework.

Policy tailwinds—now turn them into permissions

The National Planning Policy Framework was revised, reinstating tougher housing expectations and introducing concepts like prioritising lower-quality “grey belt” land. For SME builders, the signal matters: local plans are expected to meet need again, and authorities have clearer cover to allocate deliverable sites. The test for the next year is whether timetables accelerate and plans genuinely earmark parcels under 50 homes where SMEs excel.

Alongside that, ministers are preparing further measures to speed decision-making on housing and infrastructure—curbing delays, tightening judicial review windows, and letting central government intervene where projects stall. If enacted with care, those powers could unclog strategic bottlenecks and reduce the four-year odysseys that spook funders and sap SME cashflow. But they must cascade into simpler, faster routes for minor applications too, not just headline schemes.

Costs up, capacity still thin

Here’s the rub: application fees have risen (35% for majors, 25% for others) and will now index annually, yet many planning departments remain understaffed and overwhelmed. SMEs have paid more for the same—sometimes slower—service. We’ll support higher fees if (and only if) they are ring-fenced for case officer capacity, digital systems, and statutory decision deadlines with consequences.

On infrastructure funding, the picture is mixed. Freedom of Information work last year suggested large sums of Section 106 cash were sitting unspent in council accounts. Whether you think that’s caution or inertia, stagnant money means delays in occupations and choked SME cash cycles. Transparent dashboards and time-limited “use it or explain” rules would help turn obligations into action.

SMEs remain the missing middle

Parliament acknowledged years ago that SME housebuilders have collapsed from roughly 39% of output in the late 1980s to around a tenth today. That hasn’t reversed yet. The CMA’s 2024 market study also underlined how a sluggish, complex planning system entrenches scale and deters challengers. If we want more beautiful streets in market towns and city infills that respect grain and character, we must back the firms who specialise in them.

What’s working—and what to copy at scale

There’s real progress in modern methods, net-zero ready fabric, and smarter heat systems; SME sites remain living labs for these. University partnerships, pattern books, and energy-performance assurance are becoming mainstream. Where councils proactively “parcel up” large allocations into serviced small plots—sometimes with a design code and utility spines—SME delivery follows. Replicate that across local plans and you multiply capacity without waiting on a single mega-site to move.

Five practical fixes for the next 12 months

1. Require a meaningful share of housing numbers on sub-50-home sites, with clear phasing and infrastructure triggers.
2. Use public-private vehicles to forward-fund utilities and access so SMEs can build, not chase wayleaves for a year.
3. If an authority misses the clock without agreeing an extension, part of the fee is automatically rebated.
4. Mandate uniform digital validation lists, standardised conditions, and dashboards so applicants see where items are stuck.
5. Keep affordability ambitions high, but calibrate S106/CIL so viability on smaller schemes isn’t torpedoed by one-size-fits-all asks.

Outlook

I’m more optimistic than last year because policy is finally getting attention. But optimism doesn’t pour foundations. Give SMEs predictable rules, serviceable plots, and planning decisions in months not years, and we’ll deliver the variety, speed and quality the 1.5-million target needs. The cranes will follow—but so will the cottage-scale scaffolds that stitch new homes into real places. That’s the bit only SMEs can do at scale, if we’re allowed to get on with it.

Are you a developer or housing provider? Birmingham City University’s Centre for Future Homes helps organisations explore robust, scalable and sustainable solutions to general housing issues using the latest academic research. Through using evaluating models and design tools, the Centre provides sustainable and cost-effective solutions.

This blog represents the view of ProBuild360, not BCU.