Lack of land and lending is blocking new homes, FMB research reveals

Published date: 11 September 2017

A lack of available small sites and a lack of finance top the list of barriers to SME house builders increasing their delivery of new homes, according to new research by the Federation of Master Builders’ (FMB).

Key results from the FMB’s House Builders’ Survey 2017, the only annual snapshot of SME house builders, include:

  • Over half of small house builders (54%) say accessing finance is a major barrier to their ability to build more homes (up from 50% in 2016);
  • A lack of available and viable land is the most commonly cited barrier (62%) to increasing output and 54% believe that the number of small opportunities for small site development are decreasing;
  • 42% of SME house builders said that a shortage of skilled workers is a major barrier to their ability to build more new homes, and this rises to half (49%) when asked to look ahead over the next three years;
  • One in three small house builders that employ EU workers believe the end of free movement will be a major constraint on their ability to build more homes;
  • Half (49%) of SME builders view the planning system as a major constraint on their ability to grow and ‘inadequate resourcing of planning departments’ was again rated as the most significant cause of delay in the planning application process.

Brian Berry, Chief Executive of the FMB, said: "Almost a decade after the financial crisis, access to finance for small house builders is getting worse instead of better. The results of the FMB House Builders’ Survey suggest a slight worsening in the problems these firms face in accessing the finance they need to build. Assessments of lending conditions to SME developers were down slightly from 2016, the first fall in this measure since 2013. Small house builders express generally positive views of some recent Government initiatives in this area, such as the Home Building Fund, but we clearly need to double down on these efforts to make sure that SMEs have access to the finance they need to build Britain out of its housing crisis.”

Berry continued: “Our research also affirms just how vital it is that the Government acts on  key proposals in the  Housing White Paper, published earlier this year and designed to increase the opportunities for smaller scale development. Nearly two thirds of SMEs say that the lack of available and viable land is a major barrier to increasing output, the most commonly-cited barrier for the third year in a row. More worryingly still, over half say that the number of available small sites is, if anything, decreasing. The White Paper quite rightly emphasises the need to diversify the house building sector so it is less reliant on a small number of large house builders. In order to do this, we need the Government to make good on its proposals to improve the availability of small sites and speed-up the planning process for small sites.”

Berry concluded: “Over the next three years, half of SME house builders believe skills shortages will act as a major constraint on their ability to grow and this concern is now beginning to overtake more typical frustrations such as the planning system. If we get it wrong, Brexit and the end of free movement could further exacerbate the skills shortages we already have. The survey finds one third of SME house builders currently employ EU workers and this rises to 70% in London and the South East. The potential impact of post-Brexit immigration changes is therefore a cause for concern among small house builders. That’s why it’s so important that the Government introduces a transitionary period that allows the UK house building sector to gradually wean itself off high levels of EU labour.”

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