Last updated: 20 Aug 2026
Measuring SME home builder sentiment
Track changes in SME home builder confidence and assess the barriers to housing delivery and their influence on investment decisions over time.
HBF’s SME Sentiment Survey has been designed to track changes in SME home builder confidence over time and provide robust evidence to Government and policy makers on the need to address the key barriers constraining housing delivery.
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Sponsored by Quantum Development Finance
Latest results
SME confidence continues to fall as market caution deepens
Our third quarterly SME Developer Sentiment Survey reveals that confidence among small and medium-sized home builders has continued to deteriorate, with viability pressures, planning delays and weak market conditions increasingly constraining housing delivery.
More than half of SME developers (52%) expect to reduce land purchasing activity over the next three months, compared with just 13% who expect to increase it. The net balance has fallen to -39%, down from -31% in the previous quarter and significantly below the +5% recorded in Q1.
Confidence in new housing starts has also weakened, with 52% expecting to decrease construction activity over the next three months and a net balance of -28%, compared with -23% in Q2.
The Building Safety Levy adds further pressure to fragile development viability
The imminent introduction of the Building Safety Levy (BSL) is emerging as a major concern for SME developers already facing significant viability pressures.
Nine in 10 respondents agree that the costs associated with the levy will render some developments unviable. At the same time, more than a third (36%) say they have already delayed, redesigned or cancelled schemes because of the levy.
A further 69% say the introduction of the BSL will make them less likely to invest in future development opportunities. The impact is particularly pronounced in London, where 87% of respondents say the levy will affect their willingness to invest in new development.
The findings highlight concerns that the additional cost of the levy could further restrict the delivery of smaller developments, particularly apartment schemes and developments in higher-value areas.
Market conditions are suppressing investment and new site starts
Current market conditions continue to negatively affect SME developers' willingness to bring new sites forward.
Half of respondents say conditions are causing significant caution around starting new sites, while a further 43% report some caution. Only 4% say current conditions have no impact on their willingness to start new sites. Just 4% say market conditions are encouraging them to start new sites, including only 1% who report that conditions are encouraging significant expansion.
The cautious outlook reflects the difficult balance developers face between construction costs, planning and regulatory requirements, uncertain sales demand and the ability of purchasers to afford new homes.
Low buyer confidence and wider market conditions remain major barriers
SME developers continue to face significant demand-side constraints, with low buyer confidence identified as the most significant barrier, cited by 74% of respondents, up slightly from 73% in the previous quarter.
Wider housing market conditions were identified by 70% of respondents. Other significant constraints include Stamp Duty Land Tax (31%), mortgage interest rates (26%) and affordability (25%).
The findings demonstrate that the challenge facing SME developers extends beyond securing land and planning permission. Developers must also be confident that completed homes can be sold at prices buyers can afford while still delivering an acceptable development margin.
Weak buyer confidence increases the risk associated with committing capital to land and construction, particularly where developers are uncertain about sales rates and achievable values.
“The government needs to do more to support first-time buyers; we are becoming a dying breed. Key issues are viability (increased regulatory burden), lack of first-time buyer support, and lack of support from Homes England in terms of funding and making sites available." – HBF Sentiment Survey Respondent
Development viability remains the biggest challenge for SME builders
Development viability continues to be the most significant supply-side constraint facing SME home builders, cited by 75% of respondents. Planning process delays remain a close second, identified by 68% of respondents, while regulatory and taxation burdens were cited by 51%. The cost and availability of land were identified by 30%.
The findings underline the cumulative pressure being placed on SME developers by development costs, planning delays, taxation and regulatory requirements. With viability already the sector's biggest supply-side concern, the additional costs associated with the Building Safety Levy could further constrain investment and housing delivery.
"The Labour Government’s planning reforms have generally been welcome; however, they are not filtering down to the local level, so the planning hiatus remains.” – HBF Sentiment Survey Respondent
SME builders call for government action to unlock delivery
SME home builders are calling for Government action on viability, planning and buyer demand, with 72% backing developer contribution reform, 69% faster planning and 68% greater first-time buyer support.
"The industry desperately needs a government support scheme for First Time Buyers if it is to get near to building 200,000 houses a year, let alone 300,000!" – HBF Sentiment Survey Respondent
View previous results
SME Developer Sentiment Survey August 2026
SME Developer Sentiment Survey June 2026
SME Developer Sentiment Survey March 2026
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