The Intermediary – September 2026 - Flipbook - Page 65
SPECIALIST FINANCE
Opinion
Delivering smaller
development
projects
I
t would be hard to argue that
smaller sites have become
easier to deliver over recent
years. Planning remains a
complicated and unpredictable
beast, and while build cost
inflation has eased from its worst, the
pressure hasn’t disappeared. Official
figures show material prices for new
housing were still 5% higher year-onyear in June.
Developers face an ever longer list
of requirements before the bricks
even arrive on site, and for the brokers
placing this business, that complexity
lands on your desk, too. You are oen
the first person a smaller developer
turns to when a scheme needs to
stack up.
But I don’t think the conclusion
should be that small developments no
longer work. Quite the opposite. The
opportunities are still there, buyer
demand remains, lenders are keen
to lend, and crucially, there is now
greater recognition that a scheme of
five, 10 or 20 units cannot be treated
the same way as 500 houses.
Small, not simple
Smaller schemes still carry most
of the basic reports, professional
appointments and fees required on
much larger developments. Delivering
10 units doesn’t come with a 90%
discount on the consultants being used
by the 100-unit scheme up the road.
A larger developer can spread those
costs. A smaller developer simply
doesn’t have that luxury.
Research from the Home Builders
Federation (HBF) puts this into
perspective: average direct planning
costs are around £3,500 per plot on
developments of fewer than 50 homes,
compared with £1,500 on schemes of
100 to 500, and less than £1,000 on
developments exceeding 500 homes.
WILL CALITO
is head of sales and business
development at Magnet Capital
The same principle runs through
much of development: Section 106
and CIL contributions, professional
fees, biodiversity requirements,
utility connections. Individually
reasonable; collectively, they pile a
disproportionate cost onto smaller
developers. £50,000 of additional cost
spread across 100 houses is annoying.
Spread it across five houses and it can
be the difference between breaking
ground and the site heading back to
Rightmove for another lap.
The right structure, built on
sensible leverage and a realistic view
on costs, so oen decides whether a
case is placeable at all.
Planning problems
The issue isn’t simply whether
permission is eventually granted; it is
the time, uncertainty and capital tied
up geing there. Time really is money,
and delays become expensive quickly.
HBF research into small urban
development found that just 6% of
applications were determined within
the 13-week benchmark in its analysis.
Applications determined at commiee
took 53 weeks on average, compared
with 43 weeks where delegated powers
were used. For a small to medium
(SME) developer running one or two
sites, that is a real hurdle: when a
client’s entire pipeline is two schemes,
one stuck in planning removes
half of it.
Recent changes give genuine reasons
for optimism. From 31st October
2026, the new National Scheme
of Delegation will require certain
applications to be determined by
officers rather than commiee. That
includes residential schemes of one
to nine dwellings on sites below 0.5
hectares. For the right applications,
it removes an unnecessary trip to
commiee, and along with sites under
0.2 hectares becoming exempt from
biodiversity net gain requirements,
lis a weight off developers’ shoulders.
The new National Planning
Policy Framework has now formally
introduced a medium development
category, covering schemes of 10 to 49
homes on sites of up to 2.5 hectares.
Another planning definition hardly
sounds like cause for champagne,
but what sits behind it maers: an
acknowledgement that these schemes
need a proportionate approach.
Government is also consulting on
standardised Section 106 templates
for these medium-sized schemes.
The aim is not to cut what developers
contribute, but to reduce the friction
around agreeing it.
More certainty means developers
assess sites with more confidence,
lenders read their exposure more
clearly, and brokers package cases
knowing the goalposts are less likely to
shi once a deal is under way.
Clear appetite
Lender appetite for well-structured
smaller schemes remains strong: good
sites, sensible leverage, realistic build
costs and achievable GDVs will have
our backing.
Reform is only half the picture;
pairing an SME developer with a
lender that genuinely understands
smaller schemes, and structures
around their realities rather than
against them, is where deals get done.
So yes, smaller developments have
become harder to deliver. But harder
does not mean unviable. With reform
beginning to recognise the differences,
and the right funding partners, there
are reasons to be positive. ●
September 2026 | The Intermediary
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