SME home building businesses are struggling to cope under government’s anti-development policies and the increasing weight of bureaucracy.
The sheer number and complexity of the challenges facing the home building sector have left many small and medium businesses facing difficult decisions in regards to investment, delivery and employment.
The cumbersome and inefficient planning process is the biggest barrier for smaller builders and has been worsened by recent government interventions.
Proposed reforms to the National Planning Policy Framework (NPPF), particularly the removal of mandatory housing targets and a softening of the Five-Year Land Supply Requirement, have seen more than 60 Local Authorities pause or significantly slow the progression of their local housing plans.
These delays are adding months, sometimes years, to the time it takes for developers to start putting shovels in the ground, increasing uncertainty and cost.
Four years ago, Natural England began to use an EU court ruling to block new development in the south of England by requiring new housing schemes to evidence ‘nutrient neutrality’.
Since then, the government has imposed restrictions across the country and more than 145,000 new homes across 74 Local Authorities are unable to proceed with development.
Elsewhere, Natural England is intervening citing ‘water neutrality’ and ‘recreational impact zones’. Some SMEs have seen their entire development area engulfed in these restrictions.
On top of delays, the costs of the growing number of new taxes, regulations and policies are adding at least £20,000 to the cost of building a new home, impacting the financial viability of developments.
This is in addition to high levels of inflation, supply chain issues and a challenging economic environment, which has caused a myriad of increased costs including energy, materials, and labour. With capital tied up, many SMEs simply do not have the resources to operate which is threatening their very existence.
Amidst a growing housing crisis, SME home builders are critical to increasing the country’s housing supply and supporting the economy. Intervention is needed now to protect smaller businesses. If SMEs are unable to build, they risk having to lay off longstanding staff and subcontractors.
How we're representing SME home builders
On Thursday 6 July, SME home builders and members of the HBF team convened at Number 10 to hand deliver a letter signed by more than 160 small businesses. The letter calls for the Prime Minister’s support to address recent interventions of his government, which significantly affect the viability of smaller building businesses.
Prior to HBF and SME home builders delivering the letter, an overview of its contents and significant challenges to SME home builders was circulated to supportive MPs.
Meanwhile, the HBF team continue to work closely with Close Brothers Property Finance and Travis Perkins to product the next State of Play report – a series of reports shining 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.
Add your name to our letter
It's not too late to sign our letter to the Prime Minister. If you are an SME home builder and would like to become a signatory, fill out our form. Not an SME home builder but want to showcase your support for industry, fill out the form to be added to our list of supporters.Become a signatory
We’re calling on the Prime Minister to reverse his government’s anti-development policy approach. In particular, we need to see action on;
The hiatus caused by the capitulation to NIMBY MPs and the proposed weakening of the planning system has already seen 58 Local Authorities withdraw or pause their housing plans and needs to be reversed. The planning system needs to ensure the timely production and adoption of local plans, and to intervene where Authorities are failing to perform.
Four years on, ministers have failed to find solutions and lift Natural England’s disproportionate moratorium on house building that has now spread to bans on housing in 74 local authority areas and is delaying 145,000 homes. It must also consider a package of measures to assist SME house builders who haven’t the cash reserves to procure nature-based solutions and won’t benefit from the government’s proposed improvements to wastewater treatments.
The combined total of the proposed regulatory changes would add £20k to the cost of completing a new house. Whilst all individually have merit, Government departments need to coordinate such that the combined total of the asks does not make development unviable.
Government needs to work with industry to attract and train the skilled workforce it needs to deliver tomorrows energy efficient new homes.
- 85% fewer small home builders are estimated to exist today than there was a generation ago.
- 87% of 202 surveyed SME home builders were considering winding up their residential construction activities in the next three years.
- 78% of 202 surveyed SME home builders plan to significantly cut back investment.
- 93% of SME home builders are considering scaling back or changing business direction in a bid to survive.
- 92% of SMEs are unhappy with the Government’s current approach on housing
- 58 LPAs have already delayed or stopped local plan making and we have seen permissions for new homes fall to the lowest level on record.
- 77,000 homes per year is the anticipated number that the housing supply could fall by, solely as a result of the changes to the NPPF.
- 185,000 homes per year are currently estimated to be blocked due to Natural England's interventions.
Support our campaign
Help us raise awareness of the challenges facing SMEs by supporting our campaign, using the below example posts and images.
Tag our social media accounts:
Example Tweet 1
We’re calling for the Prime Minister’s support to protect small and medium home builders like us, under threat due to planning delays, rising costs and skill shortages? @10DowningStreet @HomeBuildersFed
Example Tweet 2
Planning delays, rising costs and skill shortages are making it almost impossible for #SME house builders to deliver homes our communities need
[insert local MP’s handle] We need your support #SaveOurSMEs
Example Tweet 3
We’re one of many SME #HomeBuilders calling for government to address the challenges facing industry and putting our small businesses at risk ? #SaveOurSMEs
Click on the assets to enlarge, then right click to save.
Suggested alt text: 93% of SME home builders are considering scaling back or changing business direction.