Planning delays pose the biggest threat to SME housing delivery
Small and medium-sized enterprises (SME) within the property sector have claimed the planning system is stopping them from delivering new homes.
Last week the Federation of Master Builders published their findings from their annual survey. The results highlighted that more than half of SME builders reported the planning system as their biggest barrier to delivering new homes.
One of the main reasons planning systems are halting homes progress, respondents said, was ‘inadequate resourcing’ of planning departments and poor communication.
According to the survey, which included 127 respondents, a mere 12% claimed they had a ‘high degree of certainty’ in the planning process.
Brian Berry, chief executive for the Federation of Master Builders said: ‘For small builders, the survey is clear that the system is clear that the system is too complex and costly. Communication from local planning authorities is also poor. Without changing this, planning issues are likely to loom large as a barrier for some time.’
In addition to poor communication and ‘inadequate resourcing’, the second biggest barrier that was highlighted within the survey was restricted mortgage availability with just over half (51%) claiming it as an issue.
When the survey first starting gather their data in 2015, buyer demand was recorded to be at its lowest with an average score of two out of five – five was recorded as ‘very good’ and zero was ‘very poor’.
Brian added: ‘This issue has seen a rapid rise over the last two years, reflecting the devastating impact the wider economy can have on the small house builders. With many consumers choosing not to take out mortgages it would appear the market is only getting smaller, resulting in less homes being built.’
The chief executive claimed that this would be tough for SMEs whose housebuilding market share has dwindled from 40% more than 30 years ago to just 10% now.
Against this backdrop, Brian said: ‘Lack of available land is also frustrating small builders and without proper incentives for local authorities to promote small sites it seems unlikely there will be much change.’
Interest rate charges
Within the survey it will sadly come as no surprise that the results have indicated interest rates are stopping developers form delivering as many homes as they want to be.
Access to finances to help build new homes received the lowest rating in six years of just under two out of five with interest rate charges on new loans quoted as the most significant issue restricting the ability to build new properties. 53% cited self-build or custom contracts as the most popular source of funding for a new project.
In a bid to help improve the number of new homes being delivered in the future, 24% of respondents said they plan on growing their on-site workforce over the next year. In addition, half of the people surveyed also said they would be upskilling their workforce with 36% reporting they would hire one or more apprentices.
However, these figures are down from last year as 40% said they would hire new apprentices. 12% of the people also surveyed sadly claimed they would be looking to reduce their workforce.
This sombre tone was kept up as over 70% of respondents said they lacked confidence about the new rules on biodiversity net gain which go live in 2024. More than half claimed there would be increased costs associated with future homes standards in 2025 when gas boilers can no longer be installed.
Image: Emmanuel Ikwuegbu
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