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Aiding SME builders could lead to an increase in housing delivery

by Paul Addison on January 26, 2017 No comments

Per a new report by the Home Builders Federation (HBF), over the past 25 years, there has been an approximate 80% drop in the number of SME builders.

It is claimed in the report that an additional 25,000 dwellings could be built per year, if their numbers were to return to the same levels as 2007.

It has been said by the representative for the House Building Industry (the HBF), that the report emphases the tasks faced by SME builders looking to increase output.

Interviews and discussions with smaller members of the HBF are the focus point of the report, “Reversing the decline of small house builders”,

The report mentions that during the 1960s and the 1970s it was far easier for smaller businesses to set up, quickly grow and recognise as “significant” contributors to local economies.

Over 12,000 SMEs were constructing new homes by 1988.

Having said this, between 2007 and 2009 this number is drastically lower, as roughly 33% of small companies (one third) had stopped building homes.

It is said in the report that there are a lot of, and a variety of barriers to entry and growth in the industry, with the annoyances facing larger companies also facing small and medium-sized firms, others more specific to SME builders.

Per the report, delays and costs are created due to the availability of suitable housing sites and the “constant struggle” to secure a planning consent that can be implemented through a planning process “beset by delays and bureaucracy”.

In turn this will have a negative effect on the capability for growth of SME builders.

Notwithstanding the over-all surge in loans to SMEs from the banks, undoing the decline of small house builders does imply “little has improved” since 2008, the recovery from the financial crash.

The executive chairman at the HBF, Stewart Baseley, had the following to say:

“While housing output has increased significantly in recent years, the vast majority of the increases have come from larger companies. The number of smaller builders has collapsed over recent decades with few new entrants to the market able to grow to any size. If government wants to see continued increases in supply it is imperative it enables SME builders to play their part. Removing the barriers for SME builders could result in tens of thousands of desperately needed additional homes being built and boost economies up and down the country.”

In reply it sets out numerous suggestions for the government, such as the following:

  • Commencing the presumption in favor of residential development on suitable brownfield sites, rather than the persistent dependence on public sector-led resolutions through brownfield registers or excessively limiting planning use regulation.
  • Increasing the ‘buffer’ required in five-year land supplies: Essentially, an upper limit on housing supply in an area through five-year land supplies is set up by local plans. The anticipation for a 20% ‘buffer’ of additional dwellings over and above the minimum results in it being much more liable that housing needs will be met.
  • Within the local plans, preparing for a broader range of sites.
  • A new phased planning application fee schedule. This see an increase in revenue for local planning authorities, which will act as motivation for a good performance as well as timely decision-making and discharge of conditions.
  • Lifting barrier so that builders can access government support which in other sectors, is enjoyed by SMEs.
  • Earlier participation of highways authorities in pre-planning discussions.

The head of policy at the RTPI, Richard Blyth, had the following to say:

“There are a number of ways we can support SMEs, including breaking up large sites so that a wide range of providers can deliver on them; and direct commissioning of building from housing associations and councils. On planning conditions, a balance needs to be struck between providing the right level of quality assurance and not unnecessarily stalling good development. The sharing of best practice is the best way to achieve this.”

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Paul AddisonAiding SME builders could lead to an increase in housing delivery

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