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Lack of land blamed for lack of housing

Monday 11 September 2017

A squeeze on funding and lack of availability for smaller housebuilders is aggravating Britain's housing shortage, an industry survey suggests.

The key finding of the latest House Builders' Survey, an annual study undertaken by the Federation of Master Builders’ (FMB), found that a lack of available small sites and a lack of finance top the list of obstacles in small and medium-sized housebuilders increasing their delivery of new homes.

Respondents were asked to identify what they saw as the major barriers to increasing their output of new homes, both currently and for the future. The annual snapshot found that a lack of available and viable land was the most commonly cited barrier for the third year in a row, with nearly two thirds of respondents  (62 per cent) stating this was the core issue.

Over half reported accessing finance was a major hurdle to their ability to build more homes, but whilst 17 per cent reported improved lending conditions to SMEs, 14 per cent reported a deterioration. Assessments of lending conditions to SME developers were down slightly from 2016, the first fall in this measure since 2013.

More worryingly still, 54 per cent believe that the number of areas available for small site development is decreasing, although 20 per cent did state that small sites are now being taken more seriously by planners and local authorities. 

The impact of Brexit was also apparent, with 42 per cent of respondents saying that a shortage of skilled workers is a major barrier to building homes, rising to half when looking ahead to the next three years. Of those who employ EU workers, one in three said the end of free movement would be a "major constraint" on building.

SMEs built 12 per cent of homes last year, according to the Housebuilders' Federation, equating to around 20,000 properties.

Despite the Government throwing its weight behind this part of the sector, with policies such as the Home Building Fund, a £3 billion pot to help these firms with development and infrastructure finance, many believe opportunities for SMEs are worsening.

Brian Berry, chief executive of the Federation of Master Builders’ (FMB), said:

“Almost a decade after the financial crisis, access to finance for small house builders is getting worse instead of better. The results of the FMB House Builders’ Survey suggest a slight worsening in the problems these firms face in accessing the finance they need to build.

“Small house builders express generally positive views of some recent government initiatives in this area, such as the Home Building Fund, but we clearly need to double down on these efforts to make sure that SMEs have access to the finance they need to build Britain out of its housing crisis.

“Our research also affirms just how vital it is that the government acts on key proposals in the Housing White Paper, published earlier this year and designed to increase the opportunities for smaller scale development.”