When housing delivery is discussed, the spotlight almost always falls on scale - Strategic allocations. Major urban extensions. National housebuilders. Yet, smaller and medium-sized housebuilders continue to deliver a significant proportion of new homes, often on sites that would otherwise remain stalled, overlooked or considered too complex.
At DevComms, we work closely with a range of SME housebuilders. Through recent conversations with our clients, we have been exploring the realities facing the SME housebuilders, what is improving, what remains challenging, and where meaningful change could help unlock delivery.
The picture that emerges is not one of retreat. SMEs remains ambitious and committed to delivery, but operate within an increasingly complex and risk-sensitive environment.
Understanding that reality matters. Not just for SMEs themselves, but for any serious conversation about how housing is delivered locally.
A market waiting for confidence
Across our discussions, the prevailing mood was cautious but far from pessimistic.
Buyer interest remains present in many areas, but confidence is fragile and transactions can take time to progress, especially as SMEs typically cater for those already on the ladder. Developers described a market where customers are waiting for reassurance before committing.
One SME reflected that people feel conditions are unlikely to worsen, but confidence has not fully returned. That hesitancy creates a slower, more uncertain sales environment which in turn shapes how developers approach land, investment and delivery risk.
SMEs are not stepping back from activity, but they are navigating the market carefully and with a clear focus on resilience.
Planning engagement is improving but delivery is becoming more complex
A consistent and encouraging theme was the shift in planning engagement.
Developers widely recognised that the Government’s pro-growth agenda is beginning to positively influence behaviour within local authorities. Officers and members appear more willing to support housing delivery, with discussions becoming more constructive, and schemes progressing through the system that may have stalled two years ago.
This shift in tone is important. It creates confidence to bring sites forward and signals a political environment that is more supportive of delivery.
While the principle of development may now face less political resistance, the most significant delays increasingly sit beyond the planning decision itself.
HBF’s recent industry survey showed 94% of SME developers cite delays in securing planning permission or discharging conditions as a major barrier to growth.
Utility capacity, technical approvals and infrastructure coordination are increasingly dictating programme timelines, creating situations where consent is secured but delivery cannot progress at the anticipated pace.
As one developer noted:
the direction of travel is positive, but the pathway to implementation remains challenging.
The growing technical squeeze on SME delivery
Several of our clients discussed that technical requirements are increasingly delaying delivery programmes and ultimately shaping viability for SMEs.
SuDS requirements –The updated drainage hierarchy is significantly increasing land take for attenuation and surface water management. On constrained SME sites this can materially reduce developable area and alter scheme viability late in the design process.
Biodiversity Net Gain –On-site delivery expectations continue to create pressure where space is limited, despite off-site solutions being available. Nationally a HBF survey shows 55% of SME developers now identify Biodiversity Net Gain as a major barrier to delivery, reflecting the practical challenges of implementation on smaller sites.
Building Safety Act –While widely supported in principle, compliance is introducing additional cost, specialist input and programme complexity, p`articularly for schemes that historically would not have faced this level of regulatory scrutiny.
Infrastructure capacity –Electricity, water and drainage network constraints are increasingly delaying implementation even after planning consent is secured. This highlights a widening gap between planning ambition and infrastructure readiness, particularly for medium sized sites.
None of these factors operate in isolation. Together they create an environment where technical coordination, rather than planning principle, often becomes the defining challenge for smaller developers.
Cashflow and risk remain the defining constraint
Cashflow exposure continues to be the fundamental constraint separating SMEs from larger developers.
Extended programmes, rising upfront costs and borrowing pressure are materially limiting the number of sites SMEs can realistically progress through planning and into delivery. The cumulative effect is not reduced ambition, but reduced capacity to carry risk across multiple schemes at once. This is reinforced by national findings showing that 68% of SME developers say the increasing regulatory burden is significantly impacting the financial viability of their projects.
As one developer put it:
the challenge is not the willingness to build, but the level of financial exposure required to get to a point where bricks are being laid.
This environment is also accelerating shifts in business models. SMEs are increasingly exploring partnership arrangements, additionality models and more selective site promotion strategies to manage risk and maintain delivery pipelines.
The SME advantage is quality, trust and relationships
Despite structural challenges, SMEs continue to hold clear advantages.
Developers consistently highlighted that their reputation is built on quality of product, attention to detail and the long-term presence they maintain within their regions. That continuity helps foster trusted relationships and constructive dialogue with local stakeholders, which can be particularly valuable when navigating complex planning and delivery environments.
Relationships with planning officers and councillors were also seen as an important strength. While these relationships do not remove technical challenges, they often support constructive dialogue and a shared understanding of how schemes can respond positively to local context.
SMEs are not simply delivering smaller sites. They deliver homes that reinforce local character, strengthen regional reputation and build confidence through consistency and quality.
Looking forward
Across our conversations, SMEs were clear that support does not mean lowering ambition. It means creating a delivery environment that is predictable, coordinated and proportionate to the scale of development.
Several areas consistently emerged where change could materially improve SME delivery.
Alignment across technical policy areas –Conflicting expectations between drainage, ecology, design and infrastructure create uncertainty. Greater coordination across technical regimes would improve confidence and reduce avoidable delay.
Recognition of medium-sized sites –SMEs highlighted the need for a proportionate planning and regulatory approach to medium-sized developments, where requirements currently mirror those applied to much larger schemes despite very different viability and land constraints. Several SMEs also questioned whether the 10-49 threshold should be expanded to 99 units.
Utility and infrastructure coordination –Improved alignment between housing delivery and utility providers would unlock sites that are otherwise ready to proceed. Where infrastructure upgrades sit outside developer control, clearer delivery pathways and funding mechanisms for non-strategic sites could significantly reduce programme risk.
Access to delivery-focused funding –Cashflow remains a core constraint, with SMEs highlighting the importance of funding models that support early infrastructure delivery, staged investment and partnership based approaches that reflect SME risk exposure.
Policy stability and certainty –A consistent policy environment was repeatedly identified as essential. Predictable national and local planning direction enables SMEs to make investment decisions with confidence rather than responding to continual change.
Political leadership –Clear pro-delivery messaging and officer confidence to apply planning judgement can have a tangible impact on whether schemes progress, particularly where technical considerations create competing policy pressures.
Proportionate consultee engagement –The cumulative impact of extensive consultee input on modest sites was seen as a key source of delay. A more coordinated and proportionate consultee approach could streamline delivery without weakening technical scrutiny.
Restoring market mobility –Developers consistently noted that first time buyer confidence underpins wider housing churn. The return of a “Help-to-Buy” style stimulus was raised frequently as a means to support SME delivery by improving movement across the housing ladder.
In a recent HBF report, 58% of SME developers cite the lack of Government support for first-time buyers as a major barrier to growth.
SME housebuilders play a vital role not only in their own success, but in the health of the wider housing market. A diverse and active SME sector supports delivery, strengthens local trust in development and contributes to a more resilient housing pipeline.
At the same time, navigating the current regulatory and technical landscape requires proactive engagement. As planning officers and decision makers adopt a more positive stance towards housing delivery, SMEs are increasingly needing to harness that shift through early dialogue, clear communication and a strong understanding of planning balance.
The political willingness to support delivery exists. Ensuring that this translates into real progress on individual schemes will depend on constructive engagement, confidence in decision making and the ability to articulate the wider benefits of development.
