Government urges planning authorities to adopt ‘culture of proportionality’ to support SME housebuilders

In a joint letter issued to local authorities, cabinet secretary for housing Màiri McAllan and minister for public finance Ivan McKee emphasised the crucial role smaller developers play, particularly in rural communities and on brownfield regeneration projects. They said SMEs are key to diversifying housing supply, meeting local needs, and strengthening communities.

However, ministers warned that disproportionate planning requirements and delays are undermining the viability of many small-scale housing schemes. The letter highlights evidence from SME builders who report that current planning processes often impose unnecessary costs, consultancy fees, and timing challenges that can threaten cash flow and stall projects.

“SME housebuilders are reporting to ministers that their experience is not one of proportionality and that this is undermining the viability of their schemes and their operations in general. This is something Ministers have committed to address,” the letter stated.

The government is urging planning authorities to ensure that information requirements are essential, carefully timed, and sensitive to the financial realities of SMEs. The letter also points to best practice identified by the Proportionality of Assessment Short Life Working Group, which recommended avoiding unnecessary costs and delays by questioning whether, why, what and when information should be requested in planning applications.

To help local authorities manage complex applications more efficiently, the National Planning Hub will be prioritising housing delivery, offering surge capacity and specialist expertise such as archaeological advice where in-house resources are lacking.

Looking ahead, ministers confirmed that a new public consultation on planning reforms will be launched this autumn. It will include measures specifically aimed at supporting SME builders, alongside fiscal and legislative proposals designed both to incentivise and, where necessary, penalise in order to increase the volume of housing delivery.

The letter also noted that wider work is underway to examine potential regulatory barriers to growth across housing and other key sectors. An Action and Implementation Plan is due by the end of 2025, as part of the government’s commitment to creating a business environment that supports investment and sustainable housing growth.

Ms McAllan and Mr McKee concluded: “Ministers have made clear our objective that Scotland come through and out of the housing emergency. This is dependent on a facilitative planning system which is efficient and effective and in which unnecessary delays are avoided. We are grateful for your contribution to delivering this national mission.”