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The true cost of planning delays on small and medium housebuilders

Planning is often reported to be one of the greatest barriers to development in the UK. As the housing crisis persists, the true cost of planning delays on small and medium housebuilders is increasingly brought up in political discussions.

Many reports now find that minor planning applications for 1-9 homes now take approximately 6 months from validation to reach a decision, though many SME housebuilders and planning consultants experience much longer delays.

Recently, the HBF published their 2023/24 State of Play: Challenges and Opportunities Facing SME Home Builders report. This, among other key insights, found that 93% of SMEs found delays in securing planning permission as a major barrier to growth.

In addition to the frustration and uncertainty planning delays present, there is also a significant increase in costs to SME housebuilders.

BCIS General Build Cost Index data indicates that development costs have risen by over 10% in the period since March 2022. This increase in development costs has caused many developments to be unviable and undeliverable.

Moreover, development costs are forecast to rise by over 6% by March 2026. This continuous increase in building costs will further worsen the ability of SME housebuilders to deliver residential developments around the UK.

As a planning consultancy with a specialism in development economics and viability, Viable Placemaking frequently support our clients, who vary from homeowners to large strategic developers, with the economic matters pertaining to their developments.

Recently, Viable Placemaking supported a SME housebuilder with an Economic Optimization Appraisals. These reports can be tailored to the specific needs of the client and the site though, in this case, we reviewed the development costs and opportunities at a site to recommend the most economically viable development possible at the site in the light of the relevant planning constraints.

If you would like to find out more information about how increasing development costs can impact your development or how Viable Placemaking can support your scheme, please don't hesitate to get in touch and a member of our team will be happy to help.


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