Planning delays and rising costs crippling SME housebuilders

28 Mar, 2023

The most comprehensive survey of Small and Medium Enterprise (SME) housebuilders, conducted by Close Brothers Property Finance, the Home Builders Federation (HBF) and Travis Perkins has found:

  • Securing and processing planning permission to the point where construction work can start is the major barrier to growth according to 93% of SME developers
  • The availability of land is a major issue for 52% of SME builders
  • 76% believe Local Authority staffing shortages are the main cause of delays in the process
  • Rising material (99%) and energy (88%) costs are a major concern for companies
  • Over two-thirds are impacted by the ‘nutrients’ issue that is restricting development in more than a quarter of England’s local authority areas
  • 92% of SMEs are unhappy with the Government’s current approach on housing

The SME State of Play Report, now in its third iteration, has shone a light on the delays and escalating costs associated with the planning system which are putting businesses at risk and preventing SMEs playing their part in building the homes the country needs.

The report comes as the industry faces a range of acute challenges that threaten to reverse the big increases in housing supply delivered over the past decade. Delays to the processing of planning applications; a moratorium on housing delivery in a quarter of local authority areas due to pollution of rivers caused by agricultural practices; a growing regulatory burden and increasing cost base; and an economic environment within which consumers are struggling to buy are all increasingly threatening the delivery of new homes.

The survey shows that small builders are already looking ahead to the impact that will be caused by the Government’s proposals for a new Building Safety Levy. 4 in 10 SME home builders predict the Levy on all new homes, on which the Government consulted between December and February, will be a barrier to future housing delivery.

SME builders, the number of which has plummeted over recent decades, are particularly struggling to overcome the growing number of constraints to development. 92% of those polled say they do not feel the government’s approach to planning or housing was positive, and call on Ministers to take action if it is to avoid seeing supply levels fall.

Rowland Thomas, Managing Director, Close Brothers Property Finance, comments: “The role of SMEs in the housebuilding industry has consistently been underestimated and often ignored when it comes to policy and planning. The reality, however, is that SMEs play a vitally important role in the creation of a healthy housing market and the consistent erosion of confidence in the Government’s approach to planning, especially for SMEs and first-time buyers, gives great cause for concern. As we welcome in the sixth Housing Minister in just 12 months, we must look to the current planning consultation for solutions from Whitehall and we are grateful, alongside our partners, to have been contributing to that with the aim of finally finding a workable resolution.”

Stewart Baseley, Executive Chairman of the Home Builders Federation adds: “SME builders in particular are 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.”

Kieran Griffin, Managing Director, Travis Perkins, comments: “The results of the survey have reinforced what we already knew in terms of the challenges we have faced over the last 12 months. 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. 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.”

- Ends -

Notes for editor

  • A total of 218 respondents carried out the survey, with a 91% completion rate. The respondent rate was 103% up on last year (107).
  • The majority of respondents (94%) are established businesses, with 74% trading for over 10 years and 20% trading for between 2 and 10 years
  • The regional demographic is primarily weighted across the South East (33%) and Midlands (23%), but there is also strong representation from the North West (13%) South West (11%) and London (6%)
  • In terms of the size of their businesses, 26% building >101 homes, 21% building between 26-50 homes, 16% building between 11-25 homes, 9% building 51-100 homes and 27% building between 1-10
  • 46% of respondents employ less than 10 people directly, with over under a third (32%) employing between 10-50 and 19% employing more than 50 directly (Other 3%).

For further information please contact:

Anna Geffert at HERA Communication Strategies: 07773 046 337 or

About HBF

The Home Builders Federation (HBF) is the representative body of the home building industry in England and Wales. Our members are responsible for providing around 80% of all new private homes built in England and Wales and most of our members are small or medium-sized enterprises.

About Close Brothers Property Finance

Close Brothers Property Finance are property specialists who provide personalised, flexible finance to property developers and investors across the property industry. Over the last four decades Close Brothers Property Finance has supported small and medium sized businesses. Its bespoke financial products include development finance, bridging loans and commercial investment and its specialist teams are based in three offices across the UK.

Close Brothers Property Finance is part of Close Brothers Group plc, which employs over 3,700 people, is listed on the London Stock Exchange and is a member of the FTSE 250. Close Brothers is a leading UK merchant banking group, providing lending, deposit taking, wealth management services and securities trading.

About Travis Perkins

Travis Perkins is part of Travis Perkins plc and the UK’s largest supplier of building materials to the building and construction industry. The company has a network of 560 branches and 300 tool-hire outlets and supplies thousands of product lines to trade professionals and self-builders across the nation. Customers will find a wide and varied range of quality timber, building materials, and tools along with plumbing and heating, landscaping, painting and decorating essentials in its branches.

SME Survey

2022/23 - HBF Report - State of Play: Challenges and opportunities facing SME home builders

- 4.1 MB