SMEs taking longer and paying more to obtain planning permission

According to research by Land, Planning and Development Federation (LPDF) and United Trust Bank (UTB), the time taken for SMEs to achieve outline planning permission has increased significantly from around 13 to 14 weeks in the 1990s to a whole year in 2023.

Costs to SMEs have also been increasing, going from £28,000 in today’s money in the 1990s to £125,000 to get an outline permission today.

SME builders are important as they offer diversity in the housing market and help local businesses provide local homes. They represented 39 per cent of its housing delivery in 1988 but that fell to 10 per cent in 2020.

The report has made a number of recommendations such as requirements for outline planning permission being simplified and scaled back commensurate with the ‘principle of development’.

Other requirements are that local planning authorities look to allocate more land suitable for development by SMEs and reduce or eliminate fees for smaller sites (of between 10 and 100 units).

Adam Bovingdon, head of property development at UTB, said: “UTB is committed to supporting SME housebuilders with our funding supporting the creation of around 7,000 new homes at any one time.

“We are pleased to have the opportunity to support this important study which highlights the huge burden the UK’s dysfunctional planning system places on housebuilders and most particularly small and medium sized operations which find it much more difficult to employ the economies of scale available to larger businesses.

“Lenders like UTB are queueing up to provide experienced housebuilders and developers with the money they need to create the many thousands of homes we need to build each year. Establishing a planning system which is fit for purpose should be one of the main priorities of this government and the next.”

Paul Brocklehurst, chairman of the LPDF, added: “SME housebuilders are the lifeblood of our industry but they are finding it harder and harder to deliver the homes that this country so desperately needs.

“This new research shows how we have gone backwards over the last thirty years in terms of the time and the money it takes SMEs to get planning permission. No wonder they’re collapsing in number. Without action from the government to help SME housebuilders and, a more proportionate approach, I fear we will only see further decline.”