Labour Government Unveils Major Housing Reforms to Empower Small Builders and Boost Home Construction

In a landmark announcement aimed at revitalising the UK’s faltering housing market, the Labour government has introduced a sweeping package of reforms designed to ease the burden on small and medium-sized housebuilders (SMEs). The new strategy promises to streamline planning regulations, reduce compliance costs, and unlock land and finance, all in pursuit of the ambitious goal to build 1.5 million new homes by 2030.

At the heart of the reforms is a review of the Biodiversity Net Gain (BNG) policy, which became mandatory under the 2021 Environment Act. BNG requires developers to ensure a 10% net improvement in biodiversity on housing sites—often a complex and costly process. The government is now consulting on exempting minor developments (up to nine homes) and simplifying requirements for sites of 10 to 49 homes. Officials argue this adjustment will alleviate disproportionate pressures on smaller developers without abandoning environmental responsibility.

Deputy Prime Minister and Housing Secretary Angela Rayner emphasized the need to “level the playing field” for SMEs, which once delivered 40% of the country’s homes but now face dwindling market share. “Today, we’re taking urgent action to make the system simpler, fairer, and more cost-effective, so smaller housebuilders can play a crucial role in our journey to get Britain building,” Rayner said.

New planning rules will allow trained planning officers—rather than local councillors—to fast-track approvals for small developments, cutting bureaucracy and saving local authorities time and resources. The government also plans to exempt medium-sized sites (10–49 homes) from certain levies, such as the Building Safety Levy for cladding remediation, further reducing barriers to entry for smaller firms.

To address longstanding issues of access to capital, the reforms include the launch of SME Accelerator Loans and a proposed National Housing Delivery Fund, supporting long-term finance solutions like revolving credit facilities. Additionally, Homes England will release more public land exclusively to SMEs, and a new Small Sites Aggregator pilot in Bristol, Sheffield, and Lewisham will help unlock smaller plots previously considered unviable.

Despite these developments, not all stakeholders are on board. Conservationists warn that loosening BNG rules could gut the very safeguards that protect biodiversity in urban planning. Richard Benwell, CEO of Wildlife and Countryside Link, said: “Exempting small sites would mean almost three-quarters of developments face no requirement to compensate for nature loss—these changes could leave the Biodiversity Net Gain system dead in the water.”

Yet industry insiders welcomed the move. Neil Jefferson, CEO of the Home Builders Federation, noted that while the sector supports BNG in principle, current implementation disproportionately affects smaller firms due to under-resourced councils and a shortage of ecologists. The Federation praised the reforms as a balanced step toward sustainable growth.

The package also features a £1.2 million PropTech Innovation Fund to enhance small site delivery using data tools, and £10 million to help councils recruit specialists to speed up environmental assessments. Plans are also underway to train 120,000 new construction apprentices, ensuring the industry has the workforce it needs for the decade ahead.

While critics on the Conservative side accused Labour of “stripping councillors of planning powers” and threatening greenbelt protections, Rayner insists the measures will increase accountability, reduce delays, and make housing more attainable for working families and young buyers.

The public consultation on BNG and planning thresholds is now open, with ministers urging developers, councils, and environmental groups to contribute. As the government doubles down on its “Plan for Change,” all eyes will be on how these reforms translate from policy into much-needed homes on the ground.