The report from the Close Brothers Property Finance, Home Builders Federation and Travis Perkins, which is in its third iteration, surveyed 218 people operating in the SME housebuilding space.
The report found that securing and processing planning permission to the point building can start was a “major barrier” to growth for 93 per cent of SME developers.
Over three quarters said that local authority staffing shortages were the main cause of delays in the process.
More than half said availability of land was an issue, with 99 per cent pointing to rising material costs and 99 per cent citing energy costs as crucial concerns.
Nutrient neutrality and Building Safety Levy concerns for SME housebuilders
The report added that over two thirds were impacted by the nutrient neutrality issue, which is restricting development in over a quarter of local authorities.
Nutrient neutrality is when new residential developments can only move forward if the nutrient load, such as additional phosphates and nitrates, created through additional wastewater from a development is mitigated.
In the Spring Budget this year, the government said that high levels of nutrient pollution was hindering housing delivery across 74 planning authorities.
The Department for Levelling Up said it would launch a call for evidence from local palling authorities on nutrient neutrality requires and offer funding for mitigation schemes.
The report added that the four in 10 housebuilders thought the new Building Safety Levy, which was consulted on between November last year and February this year, would be a barrier to housebuilding.
The levy will be paid by developers and charged on new residential new buildings need building control approval in England and will support building safety measures.
SME housebuilders have ‘consistently been underestimated and often ignored’
Rowland Thomas, managing director at Close Brothers Property Finance, said that the role of SME housebuilders has “consistently been underestimated and often ignored” with regards to policy and planning.
However, the reality is that SME housebuilders “play a vitally important role” in a “healthy housing market”.
Thomas continued that the “consistent erosion of confidence” in the government’s approach “gives great cause for concern”.
Stewart Baseley, executive chairman of the Home Builders Federation, added that SME builders were especially “struggling to overcome the growing constraints to housing delivery”.
“The planning process is grinding to a halt and regulatory costs are rising, whilst the nutrient issue has put the brakes on sites across a quarter of the country.
“SME house builders are a major employer and have a key role to play if we are to meet our housing needs, but their numbers have plummeted in recent years. If we are to avoid losing even more businesses amidst a drop in supply, government must take action now to create an environment within which SME builders can operate,” he added.
Kieran Griffin, managing director at Travis Perkins, continued that the results of the survey “reinforced” what it already knew.
“There is not a construction business in the country which hasn’t faced significant challenges in terms of increased costs and supply chain issues. Collectively, as an industry, we have been navigating unchartered territory, with major global events significantly impacting prices and availability of a range of materials,” he added.
Griffin said: “At Travis Perkins, we pride ourselves in forging strong relationships with our SME housebuilding clients, which are built over many years.
“While these have indeed been tested over this challenging period, these relationships are built on strong foundations, and we have continued to work closely with our clients to find solutions.”
