Substantially increasing the delivery of new homes will require developers of all sizes, operating across all parts of the country, to be able to expand their capacity and build more homes. However, house builders continue to face significant economic, regulatory and policy headwinds that are making housing delivery increasingly challenging.

These pressures are particularly acute for SME developers, who tend to be more exposed to market volatility, rising costs and delays in the planning and development process.

While the policy challenges facing SME home builders are well documented, it is equally important to understand how these barriers are being experienced in practice and the extent to which they are influencing business confidence and investment decisions.

To further this understanding, the Home Builders Federation (HBF) has launched a new quarterly SME Developer Sentiment Survey.

The survey is designed to track changes in SME home builder confidence over time and provide robust evidence to policymakers on the barriers preventing smaller firms from expanding their role within the sector.

HBF’s inaugural SME Developer Sentiment Survey ran from 19 January to 30 January 2026. A total of 100 SME developers participated, with the demographic breakdown of respondents shown below.

The survey was open to all SME home builders, not solely HBF members.

There is no single fixed definition of what constitutes an SME developer. For the purposes of this survey, and to capture a full range of perspectives, we accepted responses from developers building anywhere from a handful of homes to around 500 per year.

As shown in the chart below, over half (57%) of respondents were at the smaller end of the scale, typically delivering between 1 and 100 homes annually.

The survey received responses from developers operating across all English regions and Wales. The South East had the highest representation, with nearly half of respondents active in the region. The East Midlands (25%) and West Midlands (17%) were also well represented, while the South West accounted for a similarly strong share of respondents (25%).

Among respondents, expectations for land purchasing activity are broadly balanced, with a net +5% of respondents anticipating an increase over the next three months. However, the largest share (41%) expects activity to remain about the same.

Approximately one third (32%) of developers anticipate purchasing more land, including 26% expecting slightly more and 6% significantly more. However, over a quarter (27%) expect to reduce land purchases, suggesting continued caution in the market.

However, when the results are broken down by size, there is a clear difference in land purchasing expectations between smaller and larger SME developers, with smaller builders showing greater caution.

Developers delivering between one and 75 homes per year were significantly more likely to expect a reduction in land purchases, with 28% anticipating buying less land over the next three months, including 22% expecting a significant reduction. This compares with just 24% expecting to increase land purchases. This suggests that smaller developers in the SME category remain particularly sensitive to current market uncertainty and are more likely to scale back investment.

In contrast, larger SME developers delivering 76 or more homes per year reported more stable expectations. Nearly half (47%) of respondents expect land purchasing to remain about the same, while 30% expect to increase purchases and only 24% expect to reduce them. Notably, larger SME developers were less than half as likely as smaller developers to expect a significant reduction in land buying (10% compared with 22%).

Generally, SME developers’ expectations for housing starts are cautiously positive with a net balance of +12 of respondents expecting to increase the number of homes they start over the next three months.

30% of respondents expect activity to remain about the same, while just under three in ten (29%) expect starts to decline.

Once again, there is a clear divergence between smaller and larger SME developers in their expectations for housing starts, with smaller builders showing greater caution and a greater likelihood of reducing activity.

Developers building 1 to 75 homes per year were more likely to expect a reduction in housing starts, with 28% anticipating a decline, including 18% expecting a significant reduction. This compares with 41% expecting to increase starts, suggesting that while some smaller developers are looking to expand, a substantial proportion are scaling back activity in response to market conditions.

By contrast, larger SME developers building 76 or more homes per year reported more stable and resilient expectations. Over a third (37%) expect starts to remain about the same, and a similar proportion (37%) expect to increase activity. Only 24% expect to reduce housing starts, and they are significantly less likely than smaller developers to anticipate a major reduction (10% compared with 18%).

SME developers’ outlook on the housing market over the next three months is mixed, with sentiment overall slightly cautious. A net balance of –9% of respondents express a negative outlook for the housing market over the next three months, while 31% report a neutral view.

Just over a quarter (28%) reported a positive outlook, with only 2% describing their outlook as very positive. A small proportion of respondents (4%) did not provide an answer.

However, housing market sentiment varies considerably across regions, although caution is evident in most parts of the country. London reports the weakest outlook, with 57% of developers operating in this area expressing a negative view and just 14% reporting a positive outlook.

The South West (52% negative) and South East (51% negative) also show notably subdued sentiment. Similarly, the East of England records a higher share of negative (44%) than positive (22%) responses.

In contrast, Wales stands out as the most optimistic region, with two-thirds (67%) of developers reporting a positive outlook and only 17% expressing a negative view.

The West Midlands presents a more balanced picture, with positive and negative sentiment evenly split at 31%, while the North West and Yorkshire and the Humber show broadly mixed but slightly cautious sentiment. Overall, the findings suggest that while pockets of resilience remain, developer confidence is generally fragile across much of England, particularly in London and the South.

Current market conditions are acting as a clear constraint on SME developers’ willingness to start new sites. Seven in ten respondents (70%) reported that market conditions are causing caution, including nearly a quarter (24%) who said conditions are causing significant caution or delaying starts altogether, and 46% reporting moderate caution.

By contrast, only 13% said current conditions are encouraging expansion, and none reported that they are encouraging significant expansion. A further 17% said market conditions are having no impact on their plans.

As such, the survey results indicate that prevailing market conditions are suppressing development activity among SME home builders, with a substantial proportion delaying new site starts.

To contextualise the findings on market sentiment, SME developers were asked to select the three most significant demand-side and supply-side constraints affecting their ability to deliver new homes.

On the demand side, nearly two- thirds of respondents cited low buyer confidence (63%) and housing market conditions (61%) among their top three constraints, making these the most significant demand side barriers.

Affordability pressures were also widespread, cited by 44% of respondents, reflecting the impact of high house prices relative to incomes. Constraints relating to first-time buyers were also prominent, with 36% highlighting low first-time buyer activity levels.

Broader economic pressures continue to weigh on demand, with around a quarter of respondents identifying the cost of living (26%) and mortgage interest rates (22%) as constraints. Stamp Duty Land Tax was also cited by just over one-fifth of respondents (21%) as a key barrier to delivery.

By contrast, reduced demand from buy-to-let investors was a more limited factor, cited by just 4% of respondents.

In terms of supply side constraints, planning delays emerged as the single greatest obstacle. More than three-quarters of respondents (76%) cited delays in the planning process as one of their top three constraints, highlighting the persistent challenges SMEs face in securing timely planning decisions. Viability pressures were also widespread, identified by 57% of respondents, reflecting the cumulative impact of rising costs, policy requirements, and market conditions on scheme deliverability.

The cost and availability of land are also major constraints, cited by 42% of developers, while 38% pointed to the regulatory and taxation burden as a key limiting factor. Infrastructure-related barriers also remain significant, with 22% highlighting delays to utility connections. Other constraints, including materials and labour costs, water neutrality requirements, and access to development finance, were cited less frequently but continue to affect a meaningful proportion of SME builders.

HBF's SME Home Builder Sentiment Survey is issued every quarter. Learn more about the survey and how to get involved.