Lack of viable land biggest barrier to small housebuilders

New figures released by the Federation of Master Builders (FMB), reveal that the availability of land is the most important constraint holding back local house builders from building new homes.

The FMB’s 2021 House Builders’ Survey – the only survey of its kind to track the experience of small and medium-sized (SME) house builders in England – shows that in 2021:

• 63% of small builders are limited in their ability to build the homes we need by a lack of available and viable land;
• 62% are struggling with material shortages;
• 61% feel held back by the planning system; and
• 53% can’t find the workers they need to build their homes.

The annual survey, now in its tenth year, also indicates that buyer demand is at a survey high. Picking up on behaviour change prompted by the pandemic, with homeowners seeking more space or moves out of cities, builders report the demand for new homes is booming.

However, with just 12% of new housing delivered by small builders, compared with 40% in the 1980s, more must be done to diversify the house building market away from its overreliance on a few volume developers.

The FMB House Builders’ Survey 2021’s key lessons for Government, local government, and Homes England to support small builders, are:

• Ensure nationwide compliance with planning guidance that says 10% of housing need should be on sites no larger than one hectare.
• Provide greater resource to local planning departments, and encourage better engagement between planning departments and SMEs.
• Carefully calibrate the proposed Infrastructure Levy so it doesn’t affect the viability of the smallest sites and the SME house building sector.

Brian Berry, Chief Executive of the FMB, said: “Demand for new homes is soaring, but the decline of the small house builder has hit the capacity, competitiveness and diversity of the house building industry, and is slowing down delivery. We will fail to deliver, sustainably, 300,000 homes a year unless we take action to reverse this trend.

“Builders can’t build if they don’t have the land, and the FMB House Builders’ Survey 2021 sends a clear message. With 71% of small builders reporting the number of small site opportunities is decreasing, and only 19% feeling a high level of certainty over the outcome of planning applications, these constraints are proving stubborn to shift.

“It is not all gloom, however. Improvements in access to finance are welcome, and recent Government commitments to expand access to the self and custom build market will give small builders a boost.”