The Home Builder Federation has published a report detailing the struggles that SME housebuilders face
The State of Play report 2024/25 was published today by Close Brothers Property Finance in co-operation with the Home Builders Federation and Travis Perkins.
The report surveyed SME home builders with questions about the most pressing difficulties they face.
Planning permissions still key barrier to SMEs
Over half (51%) of SME home builders that responded to the survey stated that they had waited over a year to obtain planning permission. A further 56% of SME home builders report an uplift in cost of obtaining planning permission, with increases up to 30%. Delays in the planning system and under-resourced local authority teams were cited as key issues by 94% and 90% of respondents, respectively.
New challenges also face SME home builders, including the implementation of the Biodiversity Net Gain regime, cited by 90% of respondents as a barrier to growth due to delays in getting agreements, and only 4% believing that local authorities have the capacity to help them achieve a 10% net gain.
Nutrient and/or water neutrality restrictions are another major barrier for almost half of SME respondents, 42%, and land availability remains a major concern for 47% of respondents as well.
Furthermore, 80% of SME respondents said that obtaining suitable offers for S106 Affordable Homes is another growth barrier, and the vast majority (94%) of SME home builders that were surveyed agreed that they would like the Government to do more to support them.
SMEs have recently seen growth in construction projects, and the difficulties they face can only hamper further growth. The government has also promised £3bn in support for SMEs in a support package.
Respondents were asked how they could be supported
The number one response given when asked how the government could help them, by nearly 60% of respondents, was homebuyer incentives, including a dedicated government support scheme for buying energy-efficient new-build homes.
In spite of the impact of the economy and housing market on mortgage affordability, there is currently no government support for homeownership for the first time in 60 years. Therefore, 33% of SME respondents said that the government prioritising first-time buyers would be supportive of them.
Phil Hooper, chief executive officer of Close Brothers Property Finance, said: “In the five years in which we’ve produced the State of Play report, we’ve had a global pandemic, eight housing ministers and had 14 consecutive interest rate rises. Mandatory housing targets have been scrapped and subsequently reintroduced and uncertainty about nutrient neutrality laws, which still haven’t been resolved, has held up delivery of 160,000 new homes. It’s little surprise then that two-thirds of SME home builders say it is harder to be an SME housebuilder now than it was half a decade ago. The pro-building rhetoric coming from Westminster is promising but needs to be backed up by concrete action to get Britain building again.”
Neil Jefferson, chief executive officer of the Home Builders Federation, said: “SME home builders play a vital role in addressing the housing crisis, yet the mounting constraints on housing delivery in recent years have placed considerable strain on many small businesses. Recent planning changes are very positive but there are a number of determinants on housing supply and Government will need to pull additional policy levers if it is to achieve its ambitious housing target. Ensuring local authority planning departments have sufficient capacity to process applications efficiently is key. Government needs to do more to support prospective buyers, in particular young people, to access suitable mortgage finance. The supressed level of demand reduces the industry’s ability to invest in new sites and its supply chain and so accelerate the delivery of private and affordable homes. We also need solutions to the nutrients issue and for Housing Associations to be put on a firm financial footing, so they can take on the affordable housing delivered by home builders – both of which are significant barriers to SMEs in delivering much-needed homes”
Ben Todd, managing director at Travis Perkins Managed Services, said: “SME housebuilders provide jobs, boost the local economy, and create homes that offer safety, security, and a sense of community across the UK. This is why at Travis Perkins we’re proud to work alongside HBF and Close Brothers Property Finance to advocate for SMEs to be supported further. Reforms to the planning system, financial incentives, and targeted support for SMEs are essential to support and lay the groundwork for a housing sector that is more resilient, diverse, and capable of meeting the pressing demand for homes.”
