This is one of a series of recommendations revealed in a new report released by the HHBF which highlights the challenges faced by small to medium sized (SME) housebuilders in looking to increase housing output.
The report – “Reversing the decline of small housebuilders” - sets out a range of proposals to address the finance, planning and red tape barriers preventing smaller firms from playing a bigger part in tackling the housing crisis. Over the past 25 years the number of SME builders has reduced by around 80%, but HBF says that just getting back to the number operating in 2007 could produce an additional 25,000 homes a year.
The problems are highlighted in the report by Redrow founder Steve Morgan. He grew a fledgling business into a national publicly listed builder but he says this “would be almost inconceivable today”.
The report is based on in-depth interviews and discussions with HBF’s smaller members and highlights access to finance and the increasingly complex planning and regulatory systems as the biggest factors inhibiting the entrepreneurialism of smaller companies.
The report reveals that lending has improved little since the recovery from the 2008 financial crash and that planning is a risky and expensive process which hampers SMEs without the infrastructure and financial ability to navigate them.
HBF points out that housing supply has increased significantly in the past three years but that most of this increase has come from the largest builders. “With government keen to see numbers continuing to increase, enabling SMEs to increase output will be key,” says HBF.
In addition to reforming EU regulation the report suggests a number of other steps government could take to help including:
- Create a new Help to Build scheme to help extend sustainable lending to smaller companies
- Tackle specific planning problems that disproportionately affect the business environment for SMEs, including the lack of smaller sites and the impact of pre-commencement conditions
- Lift barriers for builders to access tax incentives and other support enjoyed by SMEs in other sectors
- Provide technical and planning advice services for fledgling businesses
Stewart Baseley, executive chairman of the Home Builders Federation, said: “Whilst housing output has increased significantly in recent years, the vast majority of the increases have come from larger companies. The number of smaller builders has collapsed over recent decades with few new entrants to the market able to grow to any size.
“If government wants to see continued increases in supply it is imperative it enables SME builders to play their part. Removing the barriers for SME builders could result in tens of thousands of desperately needed additional homes being built and boost economies up and down the country.”