Small builders, big burdens

This report has been commissioned by the Land, Planning and Development Federation (LPDF) and United Trust Bank (UTB) and prepared by Lichfields. It explores the impact of changes to the planning system since the 1990s on Small and Medium Sized (SME) housebuilders.

A consistent trend over the last thirty years has been the declining number of new homes being delivered by SME housebuilders. In 1988, SME housebuilders delivered 39% of all homes built in England, but this fell to just 10% of annual housing completions in 2020.

The potential for SMEs to deliver more homes is clear, but at a time when the ambition is to increase the number of homes built each year, Local Plans are allocating fewer small and medium sized sites for development, the lifeblood of SME housebuilder’s business models. This increases the reliance by SMEs on more risky sites outside of site allocations, sites that typically would benefit from the endorsement of an early stage of an outline planning permission.

This report focusses on this element of the increasingly laborious planning journey that face SMEs: the application for outline planning permission. We explore the evidence on whether changes in the planning system – making it more complex, more costly and more risky – have had any impact on this trend over the last thirty years. We test the hypothesis that obtaining an outline permission has come to involve the submission of larger amounts of supporting information, involves detailed pre-application discussions, creating significant upfront cost in return for an uncertain outcome, and disproportionately affects the activities of SME builders.

We find: