The Intermediary – March 2026 - Flipbook - Page 56
SPECIALIST FINANCE
Opinion
SME developers
must take the lead
I
f we are serious about
increasing housing delivery,
we need to be clear about who
will actually build the homes.
Large housebuilders will
always play an important role,
but they cannot deliver the scale and
geographic spread the UK requires on
their own. In many regional markets,
small to medium (SME) developers
are the primary delivery engine.
They work site-by-site and town-bytown, unlocking brownfield plots,
repurposing redundant buildings
and delivering homes that would
otherwise not come forward.
The strongest SME developers
are agile, commercially disciplined
and deeply embedded in their local
markets. In many areas, they are
the only developers prepared to take
on smaller or more complex sites.
Increasing output in a meaningful and
sustainable way depends on enabling
them to grow.
The difficulty is that the system
they operate within is constraining
that growth.
Planning has always required
patience. What has changed is
the scale and persistence of delay.
Approval rates have shown lile
improvement, and in many areas
have declined, while decision times
regularly extend beyond statutory
targets. This is no longer temporary
friction. It is a structural drag
on delivery.
For SME developers, the gap
between likely approval and actual
determination is where momentum
is lost. That uncertainty changes
behaviour. Sites are sequenced more
cautiously. Equity is held back for
longer. Pipeline growth slows. Risk
appetite tightens.
Unlike larger corporates, SME
developers do not have the balance
sheet strength to absorb prolonged
delays without consequence.
Equity tied up in one site cannot be
redeployed into the next. Capital
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The Intermediary | March 2026
that cannot recycle cannot fund the
next scheme. Over time, that reduces
turnover and restricts reinvestment.
Planning departments remain
under sustained pressure. Resourcing
challenges and a thinning pipeline
of experienced planners continue to
affect consistency at local authority
level. Policy reform may adjust
process, but unless planning capacity
improves in practice, delivery will
remain constrained.
Alongside planning drag sits a
funding challenge. Viable schemes
can secure funding, but all too oen,
facilities are structured around
idealised assumptions rather than
real-world delivery.
Many SME developers still operate
on a site-by-site model, with each
acquisition triggering a fresh round
of applications, valuations and
legal processes. That repetition
consumes time, increases cost and
weakens momentum.
Build costs remain elevated. Labour
availability fluctuates. Regulatory
requirements continue to evolve.
Programmes do not move in straight
lines. Milestones shi. Sales rates
vary. Costs move.
Funding structures must reflect that
reality. Facilities aligned to realistic
programmes and genuine risk provide
certainty that capital will remain
aligned as projects evolve, even when
timelines adjust.
There is growing interest in
arrangements that allow experienced
developers to manage pipelines
rather than individual sites in
isolation. Revolving credit structures,
used appropriately, allow capital
to be drawn and repaid across
multiple schemes without repeated
restructuring. Structured correctly,
this supports continuity and reduces
transactional friction.
These approaches are not universal
solutions, but they reinforce a
broader point. Finance should enable
disciplined growth, not constrain it
NEIL LEITCH
is managing director of
development finance at
Hampshire Trust Bank
through unnecessary repetition or
rigid structuring.
In this environment, broker
judgement directly influences
project outcomes.
This is no longer about sourcing
a rate. It is about assessing planning
risk, understanding programme
sensitivity and stress testing
exit assumptions before a site
is commied.
Early engagement with lenders
can determine whether a scheme
proceeds at all. Clear structuring
around realistic build programmes
can prevent manageable delay
from becoming systemic failure.
Sequencing risk across multiple sites is
now part of the broker’s responsibility.
SME developers need funding
partners who remain consistent
through uncertainty. Consistency
of approach over the life of a scheme
builds confidence to reinvest.
Unlocking growth
There are reasons for confidence. SME
developers have the appetite to build
and the ambition to expand.
Demand for well-located housing
remains resilient.
But growth will not accelerate in a
system that absorbs capital and slows
reinvestment. Planning delay reduces
turnover. Rigid funding structures
compound that pressure. Caution
becomes rational behaviour.
Improve planning capacity in
practice. Structure funding around
how development genuinely
unfolds. Encourage informed
collaboration between brokers,
lenders and developers.
When capital can recycle with
confidence, SME growth accelerates.
When SME growth accelerates,
housing supply increases. ●
