At the heart of the reforms is a £100 million loan fund targeted at SME construction firms, alongside changes to planning rules, land access and project approvals. It’s part of a broader £700 million expansion of the Home Building Fund and a flagship attempt to tackle the UK’s housing shortage by delivering 1.5 million new homes while stimulating regional growth and job creation.
According to Joe Phelan, business loans expert at money.co.uk, this is a significant moment for small developers and those working in and around the construction sector. “The government’s new reforms aim to reverse the decades-long decline in SME housebuilding,” he said. “But their impact could be even broader — helping to revive local economies and create new opportunities for small businesses of all kinds.”
For years, small developers have faced the same bureaucracy and red tape as large-scale builders. Whether building 10 homes or 100, the same processes and delays often apply. These hurdles have led to a dramatic fall in market share for SMEs — from building 40% of new homes in the 1980s to a fraction of that today.
Smaller developments — up to nine homes — will now benefit from simplified planning processes, quicker decisions by trained planning officers (rather than elected committees), and lighter biodiversity requirements. Medium-sized projects of up to 49 homes will also see regulation eased, including exemptions from the Building Safety Levy.
Homes England will release more land specifically for SME developers, and new finance options will become available via a proposed National Housing Delivery Fund. These include revolving credit facilities and partnerships with alternative lenders to improve access to funding. In parallel, a Small Sites Aggregator pilot will help identify and bundle up brownfield plots into viable community housing schemes. Trials will begin in Bristol, Sheffield, and Lewisham.
To help small firms get building, the government is investing £100 million into a new SME Accelerator Loans scheme — part of a broader £700 million extension to the Home Building Fund. The funding aims to support smaller builders who often struggle to access finance through high street banks.
Councils will also receive £10 million to recruit planning specialists and speed up environmental assessments. Meanwhile, £1.2 million will go into the PropTech Innovation Fund, which will support data and digital tools that make small site delivery faster and more efficient.
While the reforms target SME housebuilders directly, the benefits could be felt far beyond the construction sector. New housing development brings with it jobs, investment and demand for local goods and services. For small businesses — from tradespeople and suppliers to local cafés and service providers — this could mark a new wave of opportunity.
Importantly, SME builders play a key role in workforce development. They account for around 80% of construction apprentices, and with the government pledging up to 120,000 new apprenticeships, many other sectors could benefit from a growing skilled labour force.
“More homes mean more people living and working locally, with more spending power in the community,” says Phelan. “Whether you’re a builder, a baker, or a bookkeeper, this could be a moment to plan for long-term growth.”
For small housebuilders, the new rules promise quicker approvals, better access to land, and dedicated finance to help break ground. For other SMEs, the housebuilding drive may bring new customers, new job applicants and a broader sense of stability as housing shortages ease.
The government’s message is clear: it wants to “get Britain building” — and it’s looking to SMEs to lead the charge. Whether you’re in construction or simply based in an area set for housing growth, now could be the time to lay the foundations for your next stage of expansion.
