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Survey reveals SME builders constrained by lack of suitable land for new homes

A lack of available and viable land is the biggest barrier to small and medium sized builders in the UK delivering more new homes, new research shows.

It is the second year in a row that the majority of SME house builders have cited this as the biggest issue preventing them from building more homes, according to the report from the Federation of Master Builders (FMB).

The research reveals that two thirds of SME house builders believe there is not enough land and half regard the planning system and difficulties accessing finance as other serious challenges. With the under resourcing of local authorities planning department the most important cause of delays in the planning process.

On top of this 40% believe that the construction skills crisis is now presenting a major impediment to building more homes and a high proportion of SMEs believe that consumer demand for new homes remains is resilient, even in the wake of Brexit.

‘The biggest challenge facing SME house builders is the planning process. Councils need to find a way of allocating and granting planning permission for more small sites,’ said Brian Berry, chief executive of the FMB.

‘The current focus on large sites is squeezing out smaller developers, which is reducing competition in the housing market at a time when we need more, not less, choice. The limited supply of opportunities for small scale development is one of a number of key structural constraints that has seen the number of homes built by SMEs decline from around two thirds in the late 1980s to less than a quarter today,’ he explained.

‘It is absurd that the planning system treats a 300 home application in largely the same way it treats a three home application. While the Government has attempted to remove red tape in its drive to increase the number of homes being built, it would appear that its reforms have yet to make a difference,’ he pointed out.

He also explained that 95% of SME house builders report that the information demands being placed on them during the planning application process have either increased or remain as bad as they were before with the survey clearly showing that the primary cause of unnecessary delays is the planning process, with the under resourcing of planning departments being the most important concern.

‘SME house builders must be seen as a key component of the Government’s housing strategy. This means a renewed focus on granting planning permission to small sites. At the same time, the Government needs to press ahead with its proposed planning reforms, including a presumption in favour of small scale development,’ Berry added.

‘Planning departments also need to be adequately resourced so that they have the capacity to engage more closely with SME house builders and ensure planning applications are processed through the system as speedily and efficiently as they can be,’ he concluded.