Time to bring out big guns for small housebuilders

Small builders have found themselves muscled out of the housebuilding market. This week, two reports voiced the extent of the difficulty small builders are facing. A study from the Communities and Local Government Committee urged the government to help loosen volume housebuilders’ stranglehold on the market, while the NHBC released a report claiming that small builders are giving up on housebuilding.

Both reports cited the same challenges. Smaller builders struggle to access land for development as local plans predominately earmark large sites only suitable for volume builders.

Accessing finance is also problematic for small and medium builders, which are seen as a higher risk. The Communities and Local Government Committee suggested learning lessons from the German model of support for SME companies, which uses a state-owned development bank to protect lenders from liability, while providing low rates to customers.

The Committee urged the government to play a more active role in supporting the growth of Modern Methods of Construction. This includes sponsoring a single, recognised quality assurance mark to give lenders, builders and consumers’ confidence.

The Committee also championed custom and self-build homes, saying that an approach similar to the Netherlands, where people self-commission homes on publicly-owned land, should be considered in the UK.

The skills crisis couldn’t avoid a mention in either report, with both bodies asking for concrete proposals to improve further education routes into the construction industry.

The importance of workers from the European Union was also raised, as large numbers of the already-stretched workforce face an uncertain future.

Brian Berry, Chief Executive of the FMB, said, “The UK construction sector’s demand for skilled migrant workers from the EU and beyond cannot be overstated. In London alone, there are more than 157,000 non-UK construction workers constituting almost half of the industry’s workforce in the capital.

“Pre-Brexit, 60% of small construction firms are already having trouble hiring bricklayers and that’s before the UK abandons the free movement of people. If the next government implements an inflexible immigration system that hinders the ability of talented foreign construction workers from making their way to the UK, any manifesto pledges relating to the delivery of housing and infrastructure will be rendered meaningless.

“In the longer term, the most sustainable solution to the chronic skills deficit is for employers to recruit and train more home-grown talent. Undoubtedly, the best way of achieving this is to focus on increasing the quality, duration and thoroughness of construction apprenticeships. Giving technical and academic education “parity of esteem”, as the Chancellor stated in the last Budget, must be picked up and driven forward by the next Government and it’s vital that the progress we’ve made on increasing the quality of apprenticeships does not go to waste.”

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1 Comment

  • Paul Endacott May 5, 2017 2:30 pm

    This article is bang on. It is a struggle for small house builders, as BTR takes shape as a real asset class we are seeing dumper trucks of money from institutional investors and capital asset management firms being thrown at developing large blocks of apartments. Some might say there’s a gap in the market for the right company with the right ideas and the means to hook up with a manufacturer that can turn out volumetric homes with as much ease as a Ford Escort driving off the production line. Mind you, land still remains a problem, going after the empty nooks and crannies of London, Leeds and Manchester etc will prove more fruitful perhaps? At least for the niche firms.

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