In 1976, a young Tony Pidgley founded Berkeley Homes, then a modest regional firm with big ambitions. He was not alone. The 1970s were the golden decade of British housebuilding, when small and medium-sized enterprises were the lifeblood of the industry. Redrow (1974), Persimmon (1972) and Berkeley (1976) all began as SMEs.
That flourishing ecosystem coincided with the last period in which Britain consistently built enough homes. The link is no accident. When thousands of smaller firms were active, the country was completing well over 250,000 homes a year. Builders could move quickly, capital was accessible, and planning, while imperfect, was at least proportionate.
Today, that world has vanished. Before 1990, SMEs delivered nearly 40 per cent of Britain’s new homes. Now they account for barely 10 per cent. In their place stands an industry dominated by a few large firms. The housing market has become a narrow funnel with too few firms, too little competition and too slow a rate of delivery.
Pocket Living’s summer report, The Road to a Proportionate System, quantifies what many in the industry have long sensed. It now costs an SME builder around £60,000 more to deliver a one-bedroom home in London than it does a major developer. For a small builder, that increased cost is crippling and makes almost all residential delivery impossible.
The Vanishing Middle
This is not just a story of decline but of lost potential. SMEs are not peripheral players; we are the growth engine of the sector. Every large developer once started small. The next Berkeley or Barratt is out there, or would be, so long as today’s system does not extinguish ambition before it begins.
SMEs are also the sector’s training ground. They are where apprentices become site managers and site managers become directors. Large firms rely on that supply chain of skilled people. When SMEs disappear, so too does the incubator of skills and enterprise.
How We Got Here
It was not inevitable. The post-war planning system was imperfect but navigable. The 1947 settlement created national consistency without paralysis. By the 1960s and 70s, Britain had a confident middle market of regional builders delivering well-designed, locally responsive housing.
Then came the layering. The 1990 Town and Country Planning Act introduced front-loading and procedural demands that raised the cost of entry. Later reforms added new assessments, levies and technical requirements. None were unreasonable alone, but together they created a labyrinth that only the largest could afford to navigate.
It used to be possible to gain planning with just 5 submitted documents. Our latest planning application had 67, none of which were cheap, some of which will not make the world a better place.
Today, the average small-site application takes 60 weeks to determine, five times the statutory limit, and one in four requires multiple submissions. For an SME, that delay is not an inconvenience; it is an existential risk.
Towards a Proportionate System
For the first time in decades, government is beginning to recognise the scale of the problem. The Working Paper for Small and Medium Sites marks a welcome shift. It acknowledges that smaller builders face distinct and disproportionate barriers, and that supporting them is essential to restoring national housing delivery. London’s SME housebuilders require targeted and tailored support not just to thrive but to survive.
There is widespread recognition that delivering homes in London is uniquely complex and costly, and that these challenges fall hardest on smaller firms. A key reform would be to define “medium-sized” sites in London as those delivering up to 150 homes. This would allow such schemes to benefit from exemptions from biodiversity net gain requirements and the building safety levy, while also ensuring their inclusion within the National Scheme of Delegation and retention of the 13-week statutory determination period, in line with the working paper’s recommendations. It also establishes the principle for other exemptions – current planning requirements that are burdensome for smaller developers whilst achieving no meaningful gain for the policy objectives they were intended to advance.
We could go further still by introducing greater flexibility in affordable housing requirements, establishing a presumption in favour of small-site development, and exempting qualifying SME-led schemes from viability testing.
Our report builds on recent momentum. It sets out practical reforms developed with input from across the industry, including standardised planning obligations, a streamlined approach to biodiversity net gain, “brownfield passports”, proportionate planning fees, clear guidance to unlock the potential of National Development Management Policies (NDMPs), as well as many more ideas.
The newly announced emergency measures for London are to be welcomed and with the consultation now released we have an opportunity to shape these initial proposals to make sure they work for London and that they turn good intentions in to good delivery. The big question will be at a time when action has never been needed more, will these be enough?
Why It Matters
Reviving SMEs is not a nostalgic exercise; it is an economic necessity. If Britain is to deliver the homes it needs, it must restore the ladder of enterprise that sustains the sector.
History could not be clearer. When small builders thrived, Britain built at scale. The challenge now is to rediscover those conditions, not by turning back the clock but by creating proportionate rules that let ambition take root again.
There are reasons for optimism. Baroness Thornhill of the Liberal Democrats tabled an amendment to the Planning and Infrastructure Bill reflecting one of the report’s core recommendations: a more proportionate system for planning fees. It is a small but significant sign that ideas once confined to policy papers are entering the legislative mainstream.
The £60,000 gap revealed in our research is not the price of inefficiency; it is the cost of complexity and the too established position that development can solve all of society’s challenges and pay for them. There is one question that should be asked above all others when it comes to current and future policy – does this policy help or hinder housing delivery. If we are serious about housing delivery, which we must be both to address the human cost of the housing crisis and to get our economy booming again, then this should be the question that rises above all. The next generation of great builders is waiting; we just need to clear the way.
Paul Rickard is Chief Executive of SME developer and innovator, Pocket Living.
