Small builders could get exemption from Building Safety Levy under new site designation
The government is set to introduce a new ‘medium site’ category to help reduce costs for SME builders in its latest changes to the National Planning Policy Framework.
Shortly after taking office last year, then-housing secretary Angela Rayner set out a major overhaul of the policy document, reversing many of the changes implemented under her Conservative predecessor Michael Gove.
In an oral statement to parliament today, housing minister Matthew Pennycook set out further plans for changes to the National Planning Policy Framework (NPPF), which will now go out for consultation.
These included previously announced plans to introduce default approval for “suitable homes” proposed to be built around train stations, backed by minimum housing density rules. The same default ‘yes’ will apply to new homes building upwards in towns and cities.
Meanwhile, a new ‘medium site’ category has been created for schemes of between 10 and 49 homes. This is intended to make rules and costs faced by SME builders more proportionate and will include the possibility of exemptions from the Building Safety Levy.
Standards on energy efficiency and Biodiversity Net Gain have also been amended with the aim of giving builders greater “certainty”.
However, Pennycook also confirmed previous reports that national development management policies (NDMPs) would not be made statutory “at this stage”.
Introduced by the Levelling-up and Regeneration Act 2023, NDMPs are a category of national planning policy which directly influence planning decisions by overriding local policies where there is a conflict.
“Instead, we have chosen to swiftly realize their benefits through agile national policy changes, while leaving open the possibility of a future transition to statutory NDMPs,” he said.
The revised NPPF also encourages a more diverse housing mix and includes measures to ensure nature-friendly features like swift bricks are included in new builds.
It also promises “preferential treatment” for developments that “strengthen local economies and provide new services, including shops, leisure facilities, and food production”.
According to the Ministry for Housing, Communities and Local Government (MHCLG), the measures will “pave the way for a stable, rules-based system where developments that meet clear standards can move quickly from plans to construction”.
The department said it was proposing that the revisions “effectively override conflicting policies from day one, so everyone is working from the same rule book”.
In a statement to the media, MHCLG secretary of state Steve Reed said: “Right now we see a planning system that still isn’t working well enough. A system saying ‘no’ more often than it says ‘yes’ and that favours obstructing instead of building.
“It has real-world consequences for those aspiring to own a home of their own and those hoping to escape so-called temporary accommodation – we owe it to the people of this country to do everything within our power to build the homes they deserve.”
The consultation on the proposed changes ends at 11:45pm on 10 March 2026.
Reaction to the government’s proposals
Danny Pinder, director, British Property Federation
“It’s good to see the previously announced proposals make it into the draft National Planning Policy Framework. It’s particularly welcome to see explicit recognition of the need to plan for older people’s housing, following on from similar recognition of the valuable contribution that Build-to-Rent homes could make to housing supply in last year’s NPPF revisions. Housing completions have fallen off a cliff this year so measures that increase planning certainty and support a wider range of entrants into the market – whether SMEs or later living providers – have to be a good thing.
“However, the decision to make national development management policies a non-statutory element of a revised NPPF could undermine that same certainty, and we will need to examine the consultation carefully to assess the potential impact on new development.”
Matthew Evans, partner (planning), Forsters
“Steps to simplify the planning process are always welcome. Shifting to a more rule-based system that will remove ambiguity for developers and local authorities should streamline the process and deliver more homes, more quickly. Making use of brownfield land around train stations is logical, but it is also costly and at a time when viability is constrained it will be interesting to see how quickly headway is made on the delivery of new homes in these locations.
”The planning system is complex and time-consuming, which so often locks out SME housebuilders, it is therefore positive to see the introduction of a proportionate system for sites of less than 49 homes. The planning reform that the Government has rolled out so far seems to be having a material difference on the ground.”
Rico Wojtulewicz, head of policy and market insight at the National Federation of Builders
“The 2024 NPPF review unpicked the last Government’s housing blocking policies and added vital reforms to deliver for large sites and infrastructure. However, it missed a chance to focus on SMEs which is why this subsequent review was needed.
“This NPPF review gives us an opportunity to realign the planning cogs and make planning policy more predictable and coherent. As contributing authors to the ‘Identifying Land’ section in the NPPF, it also offers us an opportunity to advise the Government how it can do more to help SMEs, while pushing for our Medium sized site proposal to be front and centre of their thinking.
“As well as the Government listening to our recommendations for another NPPF review, we thank them for accepting our recommendation to increase the Building Safety Levy (BSL) exemption threshold to 50 homes.”
Catherine Williams, planning director, Home Builders Federation
“The draft NPPF reinforces Government’s commitment to reforming the planning system and removing barriers to homebuilding, retaining a clear focus on sustainable development while protecting the natural environment.
“Proposals to reduce the complexity should help to reduce delays, speeding up the time it takes to get permissioned sites to the point when homes can be built and giving some much-needed encouragement to a dwindling number of local SME home builders. This progressive approach is urgently required if the industry is going to reverse the trend of recent years that has seen a decline in the number of homes being consented.”
Rob Perrins, chair of Berkeley Group
“Our country’s housing supply is constrained by the layers of overlapping policies and regulations which make it impossibly slow, complex and expensive to build homes. We commend these positive reforms which, once adopted, will help to rationalise this dysfunctional system and create a more consistent and certain process that actually delivers the high-quality private and affordable homes people need at real scale and pace.”
No comments yet