SME Builders Push for Removal of Area Thresholds in UK Planning Reform 

The UK’s proposed planning reforms have sparked significant debate within the construction industry, with small and medium-sized builders (SMEs) calling for crucial amendments to government proposals. Whilst broadly supporting the reforms, SME builders argue that area-based thresholds could undermine the very benefits the changes are designed to deliver. 

Planning Reform Site Thresholds: The Current Proposals 

The government published its Planning Reform Working Paper: Reforming Site Thresholds in May 2025, introducing a three-tiered system for planning applications. The proposals include: 

• Minor sites: Smallest developments with minimal planning requirements 

• Medium sites: 10-49 residential units with proportionate planning conditions 

• Major sites: Largest developments with full planning obligations 

These changes aim to provide certainty to the sector, ensure the planning system is more targeted and proportionate across different scales of development, and help small and medium builders (SMEs) deliver the homes our communities need. 

The One Hectare Problem: Why SME Builders Are Concerned 

The definition of medium-sized sites includes not only the 10-49 unit threshold but also a maximum area limit of one hectare. This dual criterion has raised significant concerns among industry professionals and representative bodies. 

Michael Parinchy, Chair of the House Builders Association (HBA) and Construction Manager at ProBuild 360 Ltd, explains the issue. He states that with minimum densities, housing mix policies, and other obligations like biodiversity net gain (BNG), highways, sustainable drainage systems (SUDs) etc, hectares or other area measurements, are not a good metric to determine site size category. 

The problem centres on modern development requirements that often necessitate larger site areas, including: 

• Biodiversity net gain requirements 

• Sustainable drainage systems 

• Highway improvements 

• Grid and sewerage infrastructure 

• Active travel provisions 

These obligations frequently push development sites beyond the proposed one-hectare limit, even when containing fewer than 49 units. 

Industry Response: NFB and HBA Concerns 

Rico Wojtulewicz, Head of Policy and Market Insight for the National Federation of Builders (NFB) and HBA, highlighted the industry’s position: “We are incredibly grateful that the government has listened to industry by recognising the dwelling numbers that SMEs typically deliver on single sites. However, the inclusion of a measured area threshold risks excluding most SMEs from the proportionate planning reforms associated with a medium sized site.” 

The NFB, which had campaigned extensively for these reforms, now faces the prospect that many of its members could be excluded from the intended benefits due to the area-based restriction. 

Commercial Viability and SME Operations 

For SME builders, commercial viability calculations are fundamentally based on plot numbers rather than land area. Parinchy emphasises this point by stating that for SMEs, the commercial viability of a development is calculated using plot numbers. Therefore, to use other thresholds and measurements would be a misunderstanding of how things work at this scale and counterproductive to the real-world activation of the SME housebuilding sector. 

This disconnect between government policy metrics and industry practice could significantly impact the effectiveness of the reforms. 

The Broader Context: UK Housing Market Challenges 

More than half of SME builders surveyed by the FMB identify the planning system as their primary obstacle to delivering new homes. The planning reform proposals were designed to address these challenges and support market diversification. 

The government has stated its commitment to helping smaller housebuilders benefit from simpler rules with new reforms across land, regulation and finance. However, the current area threshold proposals may inadvertently work against this objective. 

What This Means for the Construction Industry and Construction Jobs

The ongoing debate highlights the complexity of planning reform and the need for policies that reflect real-world development practices. For recruitment within the construction and planning sectors, these changes could significantly impact: 

• Design Planning consultants: Increased demand for expertise in navigating new threshold systems 

• Project managers: Need for professionals who understand both unit-based and area-based calculations 

• SME construction roles: Potential changes in project scope and viability assessments 

The success of planning reform will largely depend on creating a system that genuinely supports SME builders whilst maintaining appropriate development standards. 

The construction industry’s ability to deliver the housing Britain needs may well hinge on resolving this threshold debate in favour of practical and commercially viable solutions. 

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