West Sussex-based Sigma Homes has announced a strategic shift, transitioning from direct housebuilding to focusing on land and planning transactions. The decision comes in response to ongoing challenges facing SME developers in the UK housing market, particularly in the Southeast of England, including prolonged planning delays, rising build costs, and higher interest rates.
Since its establishment in 2013, Sigma Homes has built nearly 300 homes across Surrey and Sussex, earning a reputation for high-quality developments in desirable locations. However, following a detailed review of market conditions, the company’s shareholders have concluded that the risks and financial pressures associated with housebuilding in the current climate outweigh the potential returns.
Geoff Potton, Chief Executive of Sigma Homes, commented: “The last few years have been exceptionally difficult for SME housebuilders. While we have successfully delivered 20 developments, the mounting challenges – particularly in planning, regulatory controls, and utilities infrastructure – have made the development process increasingly unviable. Our shareholders have taken the pragmatic decision to pivot towards land and planning for the foreseeable future, which offers greater stability and reduced areas of risk. Despite stepping back from housebuilding in the immediate future, Sigma Homes remains in business.
“We will continue to progress our live sites and uphold our excellent customer service and warranty provision for our current homeowners. However, we do not intend to pursue any new short-term land development projects in the current market. Instead, our focus will be on leveraging our expertise in land acquisition and planning, to unlock new opportunities and maintain a strong presence in the sector. We already have several exciting land opportunities for 2025, including a site with outline planning permission for 50 units in the village of Dunsfold, Surrey, and further projects in the pipeline across Hampshire, Buckinghamshire, and London Boroughs.”
Sigma Homes’ decision reflects the broader difficulties facing small and medium-sized housebuilders across the UK. The combination of planning delays, the affordable housing shortfall, unreliable utility providers, and high interest rates all against a backdrop of decreasing buyer demand has significantly impacted the viability of development projects. Securing planning permission, even for allocated sites within adopted local plans, has become increasingly time-consuming and costly. For example, one of Sigma Homes’ projects in Mid Sussex, took 15 months to gain approval, despite being an allocated site in the adopted Local Plan, demonstrating the extent of these delays.
In addition, housing associations are prioritising upgrading existing stock over investing in new developments, making it difficult for developers to fulfil Section 106 obligations. The lack of investment has caused further delays both on-site and in legal negotiations. Utility providers, particularly in the electricity sector, frequently change their capacity assessments, leading to substantial unexpected costs and further project hold-ups.
Geoff Potton continues: “We’ve experienced many examples of UK Power Network, in particular, assuring us that the local grid has sufficient capacity to support a new development then some months later insisting that a substation is required. This causes unquantifiable delays and additional costs of six figures. There is no comeback to UKPN or any sense of responsibility, and SMEs are expected to absorb the additional costs.”
The financial burden on SME developers has also intensified with rising borrowing costs and build price inflation, making it more difficult to sustain business operations. “Planning delays – whether in the determination of a detailed or outline application or in obtaining clearance of numerous prestart conditions – could cost an SME £50k per month in interest charges alone, based on current interest rates,” Potton reveals.
Sigma Homes will now focus on land trading and planning promotion, maximising its decade of experience in site identification and securing planning consents. The company’s land team, with over 100 years of combined experience, is well-positioned to assist landowners in maximising value through strategic promotion agreements and conditional contracts. This strategic change in focus and new business model will also allow Sigma Homes to broaden its geographic reach, targeting sites beyond its traditional Sussex and Surrey base.