The Q4 2026 survey, which received 115 responses from SME home builders operating across England and Wales, provides a broad picture of the challenges facing smaller developers. Respondents range from businesses delivering a handful of homes each year to those building several hundred annually, with the South East, East Midlands and South West among the most represented regions.

The findings paint a concerning picture of the near-term outlook for SME housing delivery. Almost six in ten respondents (58%) expect to purchase less land over the next three months than the previous quarter, while an even greater proportion (61%) anticipate starting construction on fewer homes. Meanwhile, an overwhelming 96% report that current market conditions are making them cautious about bringing forward new developments.

These expectations reflect the significant demand-side and supply-side pressures facing SME home builders. Development viability remains the most frequently cited supply-side constraint, identified by 84% of respondents, followed by planning delays (72%). On the demand side, general housing market conditions (69%) and low buyer confidence (64%) continue to present the greatest challenges, while mortgage rates and Stamp Duty Land Tax have become an increasingly prominent concern.

Against this challenging backdrop, confidence that the current policy agenda will improve conditions for SME home builders remains very low, with 95% of respondents stating that they are not very confident or not at all confident that meaningful improvements will be delivered.

Nevertheless, the findings also point to a potential opportunity to restore confidence and stimulate housing delivery. Three-quarters of respondents (75%) indicated that targeted demand-side measures, such as the Government's Your First Home equity loan scheme or Stamp Duty Land Tax reform, could encourage them to plan additional site starts.

However, the extent to which this potential translates into improved confidence and increased housing delivery will depend heavily on the design and implementation of the Your First Home scheme. Its eligibility criteria, accessibility and ability to stimulate additional buyer demand will be critical in determining whether it provides a meaningful boost to housing supply and how SME builders will be able to participate.

The SME Developer Sentiment Survey tracks changes in SME home builder confidence over time and provides evidence to policymakers on the barriers preventing smaller firms from growing. While the policy challenges facing SME home builders are well documented, the survey results provide a greater understanding of how these barriers are being experienced in practice, how these emerge and change over time, and the extent to which they are influencing business confidence and investment decisions.

The fourth quarterly HBF and Quantum Development Finance Sentiment Survey was open from 21 September until 9 October. A total of 115 SME developers participated, in line with the 114 responses in the previous survey. 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 in previous quarters, respondents represented a broad cross-section of SMEs. Those building 100 homes or fewer per year represented 69% of respondents, similar to the representation in Q3 survey results.

The survey received responses from developers operating across all English regions and Wales. As in previous surveys, the South East had the highest representation, with 37% active in the region. The East Midlands (23%), South West (22%) and West Midlands (21%) were also well represented. Overall, the geographical profile of respondents was broadly similar to that of the previous survey, allowing meaningful comparisons of sentiment.

It is important to note that, partway through the Q4 survey period, the Government announced plans to introduce a new equity loan scheme for first-time buyers, known as Your First Home.

While further details of the scheme are not expected until the forthcoming Budget on 28 October, making it difficult to assess its likely impact on developer confidence and future housing delivery, the announcement itself may have influenced responses submitted after 26 September. This should therefore be borne in mind when interpreting the survey findings.

As in previous surveys, respondents were asked whether they expected their business to purchase more or less land for development over the next three months, compared with the preceding three-month period.

The findings suggest that confidence in future land investment remains subdued, with a growing proportion of SME home builders anticipating a reduction in land purchases. In Q4, 58% of respondents expected to purchase less land over the next three months, up from 52% in Q3 and more than double the 27% recorded in Q1.

However, there were some encouraging signs. One in five respondents (20%) expected to increase their land purchases, up from just 13% in Q3, marking the first quarterly improvement in this measure since Q1. While this remains considerably below the 32% recorded at the beginning of the year, it suggests that confidence may be beginning to recover among a minority of developers.

Nevertheless, the overall picture remains challenging. The proportion of respondents expecting to maintain their current level of land purchases fell sharply, from 35% in Q3 to 22% in Q4, suggesting that developers are increasingly anticipating a change in their investment activity rather than maintaining existing levels.

As a result, the net balance of respondents expecting to increase rather than decrease land purchases remained firmly negative at -38 percentage points. Although this represents a marginal improvement on the -39 percentage points recorded in Q3, it remains significantly below the positive balance of +5 percentage points recorded in Q1.

Taken together, these findings suggest that, despite a modest recovery in the proportion of developers planning to increase land purchases, the wider outlook for land investment remains weak. With nearly three times as many respondents expecting to reduce their land purchases as increase them, the results point to continued caution among SME home builders, with potential implications for the pipeline of future housing developments.

The outlook for housing starts paints an equally concerning picture, with the Q4 findings pointing to a further deterioration in SME home builders' expectations for construction activity over the coming months.

Just 18% of respondents expected to start construction on more homes over the next three months, down from 24% in Q3 and less than half the 41% recorded in Q1. Conversely, more than six in ten respondents (61%) anticipated starting construction on fewer homes, an increase of nine percentage points from Q3 (52%) and more than double the proportion recorded at the beginning of the year (29%).

As a result, the net balance of respondents expecting to increase rather than decrease housing starts fell sharply from -28 percentage points in Q3 to -43 percentage points in Q4. This represents the lowest balance recorded across the four quarters and a substantial deterioration from the positive balance of +12 percentage points recorded in Q1.

Unlike the findings on land purchases, where there were some tentative signs of improving confidence, expectations for housing starts have deteriorated across all three measures. The proportion of respondents anticipating an increase in activity has fallen, while those expecting a decrease have risen, and fewer developers expect to maintain their current levels of construction.

While housing starts are typically subject to seasonal fluctuations, with construction activity often slowing during the autumn and winter months, the scale of the deterioration suggests that seasonal factors are unlikely to provide a complete explanation. Instead, the findings are consistent with the wider market pressures and viability challenges facing SME home builders, which continue to constrain their ability and willingness to bring forward new developments.

The findings highlight the challenging conditions facing the housing market across much of the country, with negative sentiment prevailing in almost every region. The North West was a notable exception, where half of respondents (50%) expressed a neutral view of current market conditions, suggesting a comparatively less pessimistic outlook.

Negative sentiment was particularly pronounced in the southern regions, with almost nine in ten respondents in the South West (88.9%) reporting a negative outlook, followed closely by the South East (83.7%). Sentiment was also overwhelmingly negative in the East of England (71.4%) and London (70%).

The concentration of negative sentiment across these regions highlights the extent of the challenges facing SME home builders, particularly in areas where development viability and housing affordability pressures may be more acute. More broadly, the findings suggest that difficult market conditions are widespread rather than confined to isolated parts of the country.

It should be noted that the results for Wales are based on a small sample size and should therefore be interpreted with caution.

Consistent with the wider survey findings, challenging market conditions are having a significant impact on SME home builders' willingness to commence development on new sites.

Overall, an overwhelming 96% of respondents reported that current market conditions were making them more cautious about starting new developments, with almost six in ten (59%) indicating that these conditions were causing considerable caution and/or delaying the commencement of new sites.

These findings further underline the extent to which ongoing market uncertainty and viability pressures are constraining development activity, raising concerns about the pipeline of new housing delivery in the months ahead.

To provide further context to the findings on market sentiment, respondents were asked to identify the three most significant demand-side and supply-side constraints affecting their ability to deliver new homes.

Housing market conditions emerged as the most frequently cited demand-side constraint facing SME home builders, identified by 69% of respondents. Low buyer confidence was the second most commonly cited factor, at 64%, with the two constraints reversing their positions from Q3.

Other significant barriers included mortgage rates, cited by 45% of respondents, a notable increase from 26% in Q3, and housing affordability, which was identified by 31% of respondents, up from 25% in the previous quarter. Stamp Duty Land Tax was cited by 29% of respondents.

These findings are consistent with the wider survey results, which point to declining expectations for housing starts and continued caution over future land investment.

As in Q3, development viability remained the most frequently cited supply-side constraint facing SME home builders, identified by 84% of respondents, up nine percentage points from 75% in the previous quarter. This increase highlights the growing pressure on the financial viability of new developments, and the challenges developers face in bringing forward new housing schemes.

Delays in the planning process were the second most frequently cited constraint, identified by 72% of respondents, underlining the continued impact of planning on housing delivery. Meanwhile, regulatory and taxation burdens were cited by 45% of respondents, down from 51% in Q3.

Taken together, these findings suggest that SME home builders continue to face substantial supply-side pressures, with worsening development viability and persistent planning delays presenting particularly significant barriers to increasing housing delivery.

With the forthcoming Budget representing one of the first major tests of Prime Minister Andy Burnham's approach to housing delivery, respondents were asked how confident they were that the new Government would improve conditions for SME home builders.

The findings reveal an overwhelming lack of confidence, with 95% of respondents stating that they were either not very confident or not at all confident that the Government would deliver meaningful improvements for the sector.

Having only taken office on 20 July 2026, it remains too early to assess the Government's performance or the effectiveness of its housing policies. Nevertheless, the findings highlight the scale of the challenge it faces in restoring confidence among SME home builders.

Against a backdrop of decades of declining SME participation in house building and successive policy failures under Governments of different political persuasions, the results suggest that developers remain deeply sceptical about the prospects for meaningful change.

The forthcoming Budget therefore represents an important opportunity for the Government to demonstrate its commitment to addressing the longstanding barriers facing SME home builders and rebuilding confidence in the sector.

More positively, the findings suggest that targeted demand-side measures, such as the Government's Your First Home equity loan scheme, could provide a significant boost to SME housing delivery, provided they are appropriately designed and implemented.

To assess the potential impact of such interventions, respondents were asked how the introduction of demand-side stimulus at the October Budget, including a new equity loan scheme for first-time buyers and/or Stamp Duty Land Tax (SDLT) reform, would influence their plans to commence development on new sites.

The results demonstrate considerable appetite among SME home builders to increase construction activity in response to measures aimed at stimulating buyer demand. Three-quarters of respondents (75%) indicated that such interventions could encourage them to plan additional site starts, with almost a third (32%) stating that they would provide significant confidence to do so. A further 43% said they would consider planning additional site starts.

Beyond encouraging new developments, demand-side stimulus could also help accelerate the delivery of homes already in the pipeline. Almost one in five respondents (18%) indicated that, while such measures would not lead to additional site starts, they could enable them to bring forward sites that were already planned.

Taken together, these findings suggest that demand-side interventions could have a positive influence on the development plans of more than nine in ten SME home builders (93%), either by encouraging additional site starts or accelerating existing schemes. By contrast, just 4% of respondents believed such measures would have no material impact on their plans, while a further 4% considered it too early to assess.

HBF's SME Home Builder Sentiment Survey is sponsored by Quantum Development Finance. Quantum Development Finance (QDF) is a specialist property lender providing flexible, short to medium-term finance solutions to SME housebuilders and property investors across England, Scotland and Wales. QDF offers loan sizes from £1m to £35m across residential development loans, bridging finance, operational real estate, and residential investment loans. www.quantumdf.com

The survey is issued every quarter. Learn more about the survey and how to get involved.