The Real Costs of Small Site Development—and Why It’s Getting Out of Hand

In most industries, doing everything right gives you a fair shot at success. But in small-scale property development, you can make all the right moves and still find the costs of small site development means you come out with nothing but a stack of invoices and no planning consent.

That’s the reality facing many small and medium-sized developers across England. The costs of small site development have reached a point where delivering modest, well-designed housing schemes is no longer financially viable. And it’s not for lack of demand, vision, or effort—it’s because the system puts enormous pressure on those trying to do things properly.

We work with many SME developers who are experienced, pragmatic, and focused on quality. But across London, the South East and East of England, we’re seeing viable schemes dropped before submission because the risks and costs are simply too high.

What Small Sites Really Cost in Practice

Let’s say you’re looking at a 0.4-hectare site on the edge of a village. It’s outside the Green Belt, not in a flood zone, and sits next to existing housing. You’re proposing fewer than ten homes. That seems, on the face of it, like a low-risk application.

But before a single drawing is submitted, you’ve already started spending. Pre-application advice with the Council, draft layouts, highways input, planning consultancy, design statements, and legal costs for an option or conditional contract—these are all up-front. Then there’s the baseline technical work: topographical survey, arboriculture, and ecology.

And because every site must demonstrate how it meets biodiversity net gain requirements, a Preliminary Ecological Appraisal is now a standard part of the planning process. While the level of reporting is rightly based on the site’s habitat value, it still means early commissioning and up-front spend before the principle of development has been established.

By the time all of that is in place, it’s not unusual for a developer to have spent £30,000–£40,000. And this is all before they have any certainty that the scheme will be supported.

There’s no refinance route at this stage. There’s no value uplift if the application is refused. It’s an investment made entirely at risk—and one that’s increasingly difficult to justify when policy interpretation and officer views can shift mid-process.

The System Isn’t Built for Small Developers

Smaller housing schemes are often straightforward in design and impact—but they’re still subject to the same core legislative requirements as major developments. And one of the clearest examples is biodiversity net gain.

Since the introduction of mandatory BNG, almost every planning application—excluding things like householder extensions, some permitted development conversions, and self-builds—must demonstrate how it achieves measurable ecological improvement. This applies even to sites with little or no existing habitat value. The requirement isn’t optional. Councils have no discretion. Whether you’re proposing six homes on an arable field or a hundred on a former airbase, you must provide the necessary ecological assessments and baseline metric data.

While the level of supporting survey work may vary depending on the site’s condition, the reporting process still adds time and cost to every application. And that’s before you consider whether off-site credits or bespoke habitat creation might be needed to meet the 10% uplift.

In principle, the policy is sound. But in practice, the impact on small site development can be disproportionate. You’re asked to prove and secure long-term ecological gains before you’ve even established that the site is suitable for housing. For many SME developers, that’s a front-loaded burden that makes marginal schemes unviable from the outset.

Town Planner using digital tablet with blueprints and surveying a new residential housing building land plot

Good Sites Are Being Lost

We’ve had conversations with developers who’ve invested heavily in pre-application work, only to walk away before submission because the numbers stopped adding up. In some cases, the site clearly met local housing needs and offered a policy-compliant scheme. But when you factor in planning risk, early-stage cost, and limited site value until permission is secured, the margin disappears.

And it’s not just individual developers who lose out. These are the very schemes that could help address housing shortfalls, boost local supply, and make better use of underused land. When they fall away, the community loses too.

What’s the Answer?

There’s no single fix. But developers can reduce risk with the right advice at the right time. That starts with a realistic planning strategy. Before commissioning specialist reports, it’s worth understanding what’s actually needed to validate the application—and what’s best left for post-approval.

It also means being clear on local policy context. Some authorities are more supportive than others. Some have under-delivery issues that tilt the balance in your favour. Some don’t. Knowing where your site stands can help shape your approach.

Pre-application advice still has its place, but it needs to be used strategically. Done well, it can flush out issues early and save time. Done poorly, it can delay the inevitable. Knowing the difference is essential.

Planning with a Commercial Mindset

At Norton Taylor Nunn, we support SME developers because we believe they’re essential to housing delivery. But the planning system needs to catch up. If we want small schemes to come forward, we need a process that is proportionate, predictable, and commercially viable.

Until then, it’s about making smart moves with the right support. We help developers make sense of the system, weigh the risks, and move forward with clarity.

If you’ve got a site and you’re not sure whether it’s worth pursuing, get in touch. We’ll give you a straight answer—and a strategy that fits.

Book a discovery call today.