REVIVING THE SME HOUSEBUILDING SECTOR
Josie Hobbs of our Residential Land team discusses the recent shift to support SME housebuilders.
The UK faces a housing crisis with a severe shortage of new homes. While large developers dominate, small and medium-sized enterprises (SMEs) once played a crucial role. In the 1980s, SMEs built 39% of the UK’s new homes; today, it’s just 12%.
But what is to blame? Data from Lichfields shows that in 1990 SME housebuilders needed to meet only four associated requirements for development – The ‘red line’ plan, ownership certificates, short form planning stations and access points, at a cost of c£28,000. Today, there are 43 requirements, with costs rising by 346% to £125,000. This has led to more challenges for SME’s, including an increase in the time it takes to achieve planning consent.
To tackle this decline and meet the government’s target of 1.5 million new homes by 2030, both the government and industry leaders are stepping up efforts to support SME housebuilders. One such initiative is the “We Fund It. You Build It” campaign from Homes England, designed to provide targeted financial support to smaller developers.
Alongside this, the “Get SMEs Building Again” report prepared by Pocket Living outlines a 10-point plan aimed at addressing the challenges faced by SMEs in the housebuilding sector. Together, these efforts represent a coordinated approach to empower small builders and ensure they have the tools they need to help solve the UK’s housing crisis.
“We Fund It. You Build It” Campaign
Launched earlier this year by Homes England, the “We Fund It. You Build It” campaign is part of the Levelling Up and Home Building Fund, a key initiative aimed at increasing housing supply and supporting smaller developers who struggle to access finance from traditional sources. The campaign’s goal is to raise awareness about the funding and expert support available to SMEs in the housebuilding sector.
The campaign offers development loans ranging from £250,000 to over £10 million, providing vital cash injections to help smaller housebuilders get their projects off the ground. This funding can be used for various purposes, including covering the ever-increasing development costs for new homes intended for sale or rent. According to the latest survey from the Federation of Master Builders (FMB), 42% of small housebuilders reported being held back by difficulties accessing finance, making this support essential for their survival.
The “Get SMEs Building Again” 10-Point Plan
In September this year, Pocket Living published a report with recommendations to Government titled ‘Get SMEs Building Again’. This report has been endorsed by various major developers and trade bodies and outlines a 10-point plan to ‘save’ the SME housebuilding sector.
Pocket Living’s report recommends empowering small and medium-sized housebuilders (SMEs) by streamlining planning processes, enhancing Homes England’s support, and creating a national public land portal. It calls for tax reforms to incentivize brownfield development, SME quotas in planning, and adoption of New Zealand’s streamlined planning model. The report also emphasizes affordable housing diversity, appointing a chief planner for consistency, and clarifying rights of light rules to reduce disputes. These measures aim to improve access, innovation, and flexibility in housing development, addressing barriers faced by SMEs.
Why These Initiatives Matter
SMEs are vital for delivering innovative, affordable, and sustainable housing. The “We Fund It. You Build It” campaign tackles financial barriers, while the 10-point plan addresses systemic challenges like planning delays and access to land.
Together, these efforts aim to empower SMEs to contribute significantly to the UK’s housing targets. Supporting small developers is essential to resolving the housing crisis, driving innovation, and delivering affordable homes nationwide.
Harris Lamb not only source opportunities for SMEs but have the multi-disciplinary expertise to help them navigate the public and private finance landscape. SMEs are a big part of the solution to resolving the housing crisis and we are committed to supporting this are of huge potential.
Sources:
https://rcka.co.uk/wp-content/uploads/2024/09/Get-SMEs-Building-Again-Report.pdf
https://www.gov.uk/government/news/find-out-how-the-levelling-up-home-building-fund-can-support-you
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iStock/yevtony