Phillip Hammond promises to back SME housebuilders in budget

November 20, 2017 / Isla MacFarlane
Phillip Hammond promises to back SME housebuilders in budget

Ahead of Wednesday’s Budget, Phillip Hammond has revealed that the government will unleash a major build programme to deliver 300,000 homes a year.

Speaking on the BBC’s Andrew Marr Show, the chancellor warned that there is no “single magic bullet” to increase housing supply and the government would not simply “pour money in”.

Ministers want to speed up developments where planning permission has been granted and give more help to small building firms, he said.

The news will be welcome relief to small builders, who have been increasingly muscled out of the housebuilding market. Richard Beresford, chief executive of the NFB, said, “We are glad to hear that Mr Hammond has recognised the need to build 300,000 new homes each year and enable SMEs to fix the broken housing market.

“We look forward to seeing Mr Hammond match his sensible words with sensible housing and planning policies in the Autumn Budget. Construction SMEs can help to get Britain building but we must be realistic about deliverable solutions.”

Small housebuilders have warned that unless SMEs’ access to finance is made easier, volume housebuilders will maintain their iron grip on the market.

Brian Berry, Chief Executive of the FMB said, “The Chancellor needs to commit to underwriting loans from banks to small house builders to get finance flowing into our sector once more.

“Nearly a decade after the financial crisis, difficulty in accessing finance remains a major barrier to small housebuilders increasing their delivery of new homes. Assessments of lending conditions to SME developers were down slightly from 2016, the first fall in this measure since 2013. These difficulties make it much harder for existing SME housebuilders to flourish and grow and deter new firms from entering the market.

“If local housebuilders are to build Britain out of the housing crisis, the Chancellor must use the Budget to pull as many levers as possible in order to enable more finance to reach SMEs. One thing the Government can do is act to reduce the capital costs of lending to this sector for smaller specialist lenders.

“If the Government wants to meet the ambitious housing targets it has set itself, it will need to ensure the long-constrained SME housing sector can once again access the finance it needs to meet the challenge of tackling Britain’s housing crisis.”

SME housebuilders are already seeing their margins squeezed as build costs increase. Recent reports suggest that Brexit has already taken its toll on the industry’s workforce, especially in London. Industry players are urging Hammond to consider the impact of Brexit and ensure the construction industry’s continued access to foreign labour.

Research from the Construction Industry Training Board has shown that 42 per cent of London’s construction employers have already experienced the impact of Brexit, specifically suffering staff shortages, project delays and reduced levels of investment.

Stewart Baseley, Executive Chairman of the Home Builders Federation, said, “More than anywhere else in the country, housebuilding sites in London rely heavily on foreign labour. As housebuilders look to build more desperately needed homes in the capital the industry is ramping up recruitment and training, but it is essential we continue to have access to skilled labour. Housing output is increasing but reducing the supply of workers could threaten further increases.”

Melanie Leech, Chief Executive of the British Property Federation added, “We urge government to make a deal as soon as possible on EU workers’ right to be here, giving them the confidence to continue calling the UK their home and providing assurance to the construction sector so we can drive forward a much-needed, ambitious housebuilding programme.”

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