SME housebuilders were given a lot of reasons to be cheerful today (7 February). However, despite the welcome promise of more support for SME builders in today’s Housing White Paper, the government needs to go further if its words are to translate into new homes.
The Housing White Paper has promised a £3 billion Home Building Fund, engineered to deliver 25,000 new homes under the current parliament and up to 225,000 in the longer term by providing loans to SME builders.
The number of SME builders building has fallen by 80% in the past 25 years and the vast majority of the increases in output in recent years have been delivered by the large companies. Around 60% of all houses are built by just 10 companies. To have any hope of meeting the government’s ambitious housing targets, more builders of all shapes and sizes are needed.
“The Housing White Paper’s provision of a £3 billion fund to support smaller housebuilders is fantastic news,” said Howard Crocker, Managing Director, Delph Property Group. “SME housebuilders have not been receiving adequate support and as a result now only provide a quarter of new homes – prior to the financial crash they provided nearly 50%. Unlike large developers, small housebuilders have the ability to provide developments tailored to an area’s specific needs, due to their more flexible housing models.”
Greg Hill, Deputy Managing Director at Hill, added, “The Housing White Paper should empower SMEs to have the confidence to do something different, as innovation can be highly challenging in a restricted and confined sector. With the right support and by prioritising sensitive design, working in partnership and engaging with key stakeholders, SMEs will be able to flourish.
“SMEs are in the perfect position to step away from convention and embrace new designs and methods of construction due to their flexibility. We have the opportunity to engender greater collaboration and bridge the gap between housebuilders, local communities and local authorities. This will in turn allow us as an industry to build the homes which people not only need but will also love.”
According to the House Builders Federation, moves to assist SME builders – in particular to simplify the planning and regulatory system and assist with financing, will go a long way to increasing supply.
Stewart Baseley, executive chairman of the Home Builders Federation said, “Plans to speed up the planning process, bring forward more developable land and make Local Authorities abide by their responsibilities are key. If we are to build more homes, we need more land coming through the system more quickly. Measures that will allow SME builders to build more homes will increase the capacity of the industry and result in increases in overall supply.”
The ability for councils to increase planning fees by 20% should also increase housebuilding by SMEs, according to the Federation of Master Builders.
Brian Berry, Chief Executive of the FMB, said, “Both housebuilders and local authorities agree that the government will not be able to build one million homes by 2020 unless council planning departments are properly funded. That’s why SME housebuilders will give a cautious welcome to the announcement in today’s Housing White Paper that central government will allow councils to increase planning fees by 20% if they commit to investing the extra funds in planning alone and not in other areas.
“This is something that the FMB has been calling for and in our view, is one of the biggest game changers to come from today’s 100 page Housing White Paper. If this can be shown to deliver real improvements in planning, then it would make a good case for further increases along the lines the White Paper suggests.”