VIDEO | Sustainability vs supply: Are housing targets achievable?
How has devolution and recent changes to planning regulations affected SME housebuilders, and what role does the sector have in helping to achieve the ambitious 1.5m home target set by Labour? This was the topic of conversation at a roundtable convened by FTSE 250 lender, Paragon Bank, in Leeds, featuring Igloo Regeneration, Adderstone Living, Lanley Homes and Quod.
The UK’s evolving planning regime is having a profound impact on small and medium-sized housebuilders and with the government’s latest changes to policy now filtering down through local systems, concerns are growing that the new rules may be hindering, rather than helping, the very sector critical to solving the country’s housing crisis.
A key theme was the growing disconnect between national planning objectives and local policy implementation. Karl Kent, Relationship Director in Paragon’s Development Finance division, noted: “With devolution, some local authorities will see it as an opportunity, like Manchester did a few years ago, and really embrace it.
“Others will see it more as a challenge and will wait to see what others are doing before taking action. That’s part of the problem – instead of having a clear set of rules from government, it’s left open. The authorities that take initiative will do really well, while those that just sit back may fall behind.”
Unlike large developers, SMEs can lack the resources to navigate inconsistent or delayed local processes, and one of the most pressing issues raised was access to land. Attendees noted that large-scale housing schemes often dominate strategic plans, but these don’t align with how SMEs build homes.
Another challenge for SME developers is the mounting burden of viability assessments and affordable housing requirements, which can stall or kill smaller projects altogether, and can actually become detrimental to housing and affordable housing targets in general. Neil McManus, Lanley Homes, made the point: “The equation we’ve got is that the affordable housing threshold – currently at 10 units or half a hectare – just isn’t viable anymore. We can’t sell one out of the six units that would be required under that threshold, because RSLs [registered social landlords] don’t want tiny pockets of affordable homes. And that’s leading to the artificial construction of big houses. So, on a site where I could deliver 17 homes, I end up putting nine massive units instead. That’s not housing delivery – it’s just building big houses for people who already have plenty of money. And that’s not really what should be happening.”
There was broad agreement that the planning system must be better tailored to support agile developers and help them scale solutions, especially in delivering affordable and community-focused housing.
Innovation from SMEs was seen as a key strength in the sector not just in design, but in the approach to sustainable building and community benefit. Insiyah Khushnood from igloo Regeneration noted: “For us, it’s about placemaking. We don’t talk about units, we talk about homes. It’s about creating communities. Placemaking is at the heart of what we do. Yes, we often achieve higher values, but that’s not the goal – it’s simply the outcome when things are done with the right intention from the start.
“We don’t chase land banks, we focus on long-term, sustainable delivery… It’s more often SMEs who drive innovation, not the big housebuilders. We deliver zero-bill homes across the country in partnership with Octopus — homes where residents have no electricity bill at all.”
However it was noted that these efforts require strong leadership and reliable funding strategies, such as Paragon Bank’s Green Homes initiative, which is designed to support SME housebuilders in delivering highly energy-efficient new homes. The programme aims to accelerate the UK’s transition to net zero by incentivising better energy performance in housing. Launched in 2021, the fund has since grown to £300m.
The discussion also touched on rising costs, supply chain inflation and the growing shortage of skilled tradespeople, with the group agreeing that in the long-term – and amid an ageing workforce with many tradespeople expected to retire in the next few years – investment in education, including trade-focused degrees and apprenticeships, is essential to secure the sector’s future.
As competition in the property market intensifies and local authorities struggle with capacity and clarity, regional collaboration was also seen as key. Without a joined-up approach across planning bodies, infrastructure providers and developers, SME builders risk being locked out of the market altogether.
For now, the message is clear: if policymakers are serious about accelerating housing delivery, they must simplify the system, unlock small sites and empower SMEs to do what they do best – build quality homes, quickly.
Participants
- Karl Kent, Paragon Bank
- Neal Moy, Paragon Bank
- Lewis Jenkins, Quod
- Neil McManus, Lanley Homes
- Insiyah Khushnood, igloo Regeneration
- Richard Coy, Adderstone Living
Find out more by watching the video at the top of this page, or on the Place North YouTube channel.
