23/10/2020

Why we need SME housebuilders to thrive.

The last couple of years have been somewhat challenging for smaller scale housebuilders, a group who play a vital role in the delivery of new housing across the country. We look at some of the barriers they face in today’s market and explore why we need SME housebuilders to thrive.

New survey outlines concern
Despite the government putting in place financial support measures at the start of the year, a new survey carried out by the Home Builders Federation (HBF) and Close Brothers Property Finance reveals that SME housebuilders are struggling. Figures from the survey show that the thirds of SME housebuilders (65%) say their growth projections are down due to Covid-19. Plus, 76% of SMEs use the Help to Buy scheme, and with the regional price caps set to come into force next year, there is worry these will also be a barrier to future growth. 83% of the survey respondents cited planning delays and securing permission to build as problems which will continue to hamper housing delivery over the next 12 months.

The effect of the pandemic
The survey results show clearly that there is a threat to SME housebuilders since Covid-19 struck. It is a real blow for a group for whom overcoming bureaucracy and regulation, and navigating their way through difficult operating environments, has seen their numbers drop. The impact of the last recession is still raw for SME housebuilders; between 2007 and 2009, around a third of small housebuilders were lost. And the pandemic has brought more challenges. According to the research, some small developers are facing issues such as delays, inconsistent approaches from lenders, and complete refusal to lend to the real estate sector, when they try to access financial support. Even the government’s financial support measure for businesses in the wake of the pandemic have proved uneventful for some. According to the survey, 53% and just over half of the respondents tried to access support via the Coronavirus Business Interruption Loan Scheme (CBILS), and only 44% were successful.

Supporting SME developers is vital
This all comes at a time when the country is working hard to boost housing supply. And the focus on getting housebuilding back on track is even more important as we live through the pandemic. It is vital that SME housebuilders can get the support they need, so they can play their important role in delivering housing stock. Without their growth, the numbers will wane further, and that is a real issue for the housebuilding sector. Compared to much larger developers, SME housebuilders are integral to the economic growth of their communities, and regional property markets. Not only do they offer exceptional value, and help keep the industry competitive, but they also help to develop and train the housebuilders of tomorrow. Their presence creates jobs, increases housing supply, and helps local economies up and down the country.

What help is there for SME developers?
There have been efforts made, both prior to and during the pandemic, to support small developers. In January this year, the housing secretary Robert Jenrick announced a £1bn finance scheme to enable small housebuilders to enter the market and help the government with their new home building commitment. The ENABLE Build Programme has been designed to help local builders secure loans from participating banks. The government also announced an overhaul of the outdated planning system in the country over the Summer. The complexity of the planning system has always been a major hurdle for SME builders. Now that local housing plans can be developed and agreed in 30 months as opposed to seven years, will certainly help. Gaining access to affordable land has been another issue for small developers and the relaxation of the rules for brownfield development, could make a difference for smaller housebuilders across the country.

New Homes Place is a web-based property portal dedicated to new-build homes. From small housebuilders to the leading national developers, we bring together all the new housing developments across the country. This makes it easier for prospective home buyers to search, enquire and go on to buy a new-build home. If you are a house builder, ask about advertising your new properties with us today! Get in touch – email@newhomes.place .

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