Small but Mighty Housebuilders

Smaller housebuilders could be the answer to the housing supply issue – but they will need support.

Turning to the Smaller Housebuilders

Could it be that the UK’s smaller housebuilding companies could be the solution when it comes to boosting housing supply? The builders themselves certainly think so. The government has been lobbied by a coalition of smaller companies, who are looking for the Levelling Up and Regeneration Bill to offer them more support.

The result of the call for a change in policies to help support them has led the government to commit to consulting on a change to the National Policy Framework. This change would be aimed at encouraging smaller house building sites and enabling the creation of an increased number of affordable homes.

Over the past 30 years, the number of homes built by small and medium sized builders has dropped dramatically. In 1988, they delivered around 39% of new homes, while current figures estimated that only about 10% of homes built in England and Wales have been provided by these smaller companies.

The Federation of Master Builders (FMB), is the largest trade association in the UK construction industry, representing the interests of small and medium-sized building companies and lobbying for members at both national and local levels. It estimates that, given the right level of support, small builders are capable of building a total of 65,000 homes a year by 2025, compared to the 12,000 they delivered in 2021.

High Quality Homes

Back in 2022, Brian Berry Chief Executive at the FMB said: “Small, local builders deliver high-quality homes day in, day out. The Government needs to act to get small housebuilders unstuck from the complex planning system and back to delivering high-quality, diverse homes, using skilled local workers. Unfortunately, substantial planning barriers stop the nation’s small house builders from delivering homes for their communities. It’s clear that better engagement with SMEs from local planning authorities would help deliver Government ambitions.”

So how could these companies be supported in delivering more homes? They’d need help from local authorities, who could follow the example of the Greater London Authority (GLA), for a start. The GLA offers a Small Sites, Small Builders programme, which through funding feasibility studies, has so far identified 40 suitable sites suitable for development by smaller housebuilders.

Streamlining the planning process is also key, because at present it can take just as long to get permission for a small site as for a major development from one of the big players. Again, the GLA has taken this in hand to a degree – with a fast-track scheme for planning permission on developments to be built on public land that offer half of the housing stock as affordable homes.

Dividing up larger areas of land could also help small housebuilders to take on more developments. A couple of added bonuses could be the introduction of more diversity onto larger ‘estates’, and making it more affordable for smaller companies, with a ‘master developer’ taking on responsibility for creating infrastructure for the entire site.

Home Building Fund

The key overall, though, is for provisions to be put in place to enable local authorities to work with the smaller companies, liaising with them to identify suitable sites, allocating smaller development sites within local plans, and offering funding where necessary.

The government’s Levelling Up Home Building Fund has £1.5 billion at its disposal, with the opportunity to lend between £2 and £5 million to smaller housebuilders. The fund is operated by LAs (and Homes England within London) and the authorities should be signposting this to the small and SME housebuilders in their area.

With more support, these housebuilders could certainly prove that small can be mighty within the industry.

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