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Guest Blog: How Can SME Developers Compete in the Property Market?

By Hugh Gibbs, co-founder of

The small housebuilder is a critical part of our construction ecosystem – having our homes built by local companies that interact with their communities and respond to their unique criteria is something that larger companies cannot replicate. In the UK, however, these larger multinational housebuilders are steadily increasing their stranglehold on the market, reducing the stake of the SME developer more and more every year.

In 1988, small housebuilders were responsible for 40% of new build homes in the UK, but as of 2018, that proportion had shrunk to just 12%. This reduction is even more troublesome as the UK continues to fall short of its target of 300,000 new homes a year, as their underperformance has a knock-on effect on the battle for sufficient affordable housing.

The Government has promised a measure of support for SME developers in recent years, pledging £1bn in available credit to help weather the challenges of an unforgiving market, but the numbers do not seem to be reversing. The problems facing small housebuilders were numerous even before the pandemic, and solutions are needed to ensure their survival and to keep fair competition alive within the construction industry.

If we examine the pressures these small housebuilders face, we will begin to see the areas in which they need to improve and the kinds of solutions they need to explore to start regaining their former footing. The first step on the road to recovery is addressing our current planning system, and what can be done to get the most out of it – or better yet, avoid it entirely.

Planning to succeed

Locked in a competitive marketplace with much larger companies that have deeper pockets and broader scopes, the playing field for SME developers is far from level. Unfavourable lending terms and a stunted, slow-moving planning system work in the favour of the larger players, who are better insulated against the shocks and delays common in today’s construction cycle. These factors are unlikely to change, therefore small housebuilders will have to think creatively and adopt creative solutions to shift the odds in their favour.

A critical step in the construction cycle is finding suitable sites that are fit for development or conversion, and then attaining the necessary planning permission to do so. This is one area where a savvy approach can offer smaller companies an advantage, as they can utilise available tools to identify overlooked value in the field. When sourcing sites, you need to find plots of land that fit your criteria and that are viable to attain the necessary permissions to commence work – and you need to do this quickly.

This is where permitted development rights (PDRs) can come in handy. These time-saving tools were implemented by the government as a means of reducing congestion on an overloaded planning system, but in practice, they offer developers the chance to sidestep the headache of formal planning applications. PDR-eligible sites include brownfield stock, the disused commercial sites that the Government is also targeting in its recent budget pledge to regenerate an additional 180,000 affordable homes.

With nothing more than prior approval from the Local Planning Authority, developers can begin work much sooner and avoid the loss of vital time and resources. On SearchLand’s platform, we encourage our users to pursue PDR-eligible sites by including them in our search filters, having already identified over 27,500 such sites that are just waiting to be converted – this way SME developers can embed PDR opportunities into their site sourcing strategies automatically.

Running smarter

Using PDR data to identify sites isn’t the only way that digitally-driven strategies can help small businesses. I’ve already mentioned how the greater size and scope of larger developers can offer an advantage when canvassing areas for potential sites and withstanding planning setbacks, but SME developers can also find value within their smaller scale. Smaller companies can be more agile, meaning they can more easily adopt entirely new processes and pivot to new ideas at a faster pace than their larger counterparts.

It is in this way that data can be an incredibly powerful tool for small housebuilders – it can empower virtually every element of their pipeline, from how they source sites and conduct their letter sending to the way they manage internal processes and can ultimately safeguard a company’s time and resources. The data revolution has already had a profound impact on the performance of organisations across countless sectors: healthcare, logistics, transport, finance and even sport. SME developers, thanks to their size, can adopt this mindset quicker than their competitors and begin to reap the benefits sooner.

Built on principles

The modern consumer is more likely to consider where their products come from: not just in terms of their environmental impact, but also the ethical and ideological environment of the supplying company. Green products are growing in popularity in everything from clothing to financial products; ultimately, a company’s credentials matter more than ever before.

Putting their ability to pivot to good use, SME developers should examine not just the processes by which they do business, but also the effect they hope to have on the environment and the social impact they’d like their output to have on the community at large. A key benefit small housebuilders have is that they typically serve a smaller area than their competitors, and are able to engage with local people more meaningfully and operate in a way that reflects their interests.

Having strong ESG principles is not just a strategy that will endear SME developers to their customers – it is a commitment to being well and sustainably run that will only contribute to their longevity, better serving their community and the environment while also enjoying a better and more inclusive workplace culture. Thanks to their size, they can enact meaningful change quicker – and they should.

A brighter future for the little guy

There is no silver bullet when it comes to safeguarding our nation’s small housebuilders against decline. The strategies I have suggested in this article may not be enough to reverse the situation, but they can certainly help to mitigate the ever-growing risks they face in today’s market.

As we emerge from the pandemic, it is vital that we maintain competition within our construction industry and do everything within our power to support the key role SME’s can play in contributing to the supply of much-needed affordable housing that we lack.

While the odds may not be in favour of smaller players, implementing data-driven strategies, anticipating new market trends and embracing every weapon in their arsenal could be critical success factors that could help address the current imbalance and ensure the business continuity of SMEs as the backbone of our economy.