Lack of finance and land hobbling small house builders

In its annual survey of SME house builders, 54% said access to finance is a major barrier to their abilities to build more homes. This has increased since 2016, when the figure was 50%.

A lack of available and viable land is the most commonly cited barrier

to increasing output and 54% believe that the number of small opportunities for small site development are decreasing.

Other barriers named include the planning system (49%) and a shortage of skilled workers (42%). One in three small house builders that employ EU workers believe the end of free movement will be a major constraint.

Brian Berry, chief executive of the FMB, said access to finance for small house builders is getting worse instead of better.

“Small house builders express generally positive views of some recent government initiatives in this area, such as the Home Building Fund, but we clearly need to double down on these efforts to make sure that SMEs have access to the finance they need to build Britain out of its housing crisis,” he said.

Berry called on government to act on promises made in the Housing White Paper, published earlier this year.

“The White Paper quite rightly emphasises the need to diversify the house building sector so it is less reliant on a small number of large house builders. In order to do this, we need the government to make good on its proposals to improve the availability of small sites and speed-up the planning process for small sites,” he said.

Berry added that getting Brexit wrong would exacerbate skills shortages. One third of SME house builders currently employ EU workers and this rises to 70% in London and the South East.

“The potential impact of post-Brexit immigration changes is therefore a cause for concern among small house builders. That’s why it’s so important that the government introduces a transitionary period that allows the UK house building sector to gradually wean itself off high levels of EU labour.”

In London the mayor’s draft housing strategy proposes a presumption in favour of appropriate residential development on small sites in order to simplify the planning process.

Noel Meredith, executive director of United Trust Bank, said this could make a huge difference to small house builders.

“There are thousands of smaller development and redevelopment sites scattered over London which would make perfect projects for SME house builders. The proposal would encourage builders to seek out opportunities in areas and markets with which they are familiar and to build homes for local people,” he said.

“United Trust Bank is ready, willing and able to support experienced SME developers with the funding they require to build the thousands of new homes London needs.”