Small builders face serious barriers to growth – NHBC

Planning, access to finance and land availability are the biggest challenges which face small house builders in the UK, according to research by the NHBC Foundation.
The report, ‘Improving the prospects for small house builders and developers’, shows that there has been a significant decline in the number of small firms active in house building in recent years – halving between 2007 and 2013, with only 2,710 estimated to have been building last year.

Of nearly 500 small house builders and developers surveyed, one third said that that the planning application process and conditions attached to planning represented a major challenge to their business.

Securing suitable finance for projects was identified as a major challenge for nearly a quarter (22%) of smaller companies.

The availability of land at a suitable price was seen as a major challenge by 14% of the small companies, while nearly three quarters (74%) felt that there would be insufficient good quality subcontractors and trades to meet the needs of a growth market over the next 2-3 years.

The report contains a number of recommendations to address these barriers, including speeding up the planning decisions, promoting the Builders Finance Fund for smaller builders and making information on land availability more accessible, particularly for underused/surplus public assets and ‘brownfield’ opportunities.

Neil Smith, head of research and innovation, NHBC, said: “Small house builders and developers have made a significant contribution to the UK’s housing output over the years.

“Our research has found that the current business environment is not conducive to growth for small builders and developers. There are a number of factors at play, related in particular to the planning system, access to finance, land availability and a shortage of skills.

“For small companies, who often have limited financial resources or reserves, small differences in the way lending is structured and delays related to planning applications (among other factors) can be critical and make all the difference to the long-term viability of their business.

“The UK is still building way below the number of homes we need. We must make it a priority to address these barriers if small house builders and developers are to prosper and make a greater contribution to the housing-market recovery.”

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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