Finance a major barrier for housebuilder SMEs

For its report, Improving the prospects for small housebuilders and developers, the Foundation - with support from HBF, HBA and the FMB - canvassed the views of almost 500 small housebuilders and developers, finding that they were yet to benefit from the recovery's early stages.

Almost a quarter of firms – 22% - said that securing finance for projects was a “major challenge”. One third cited the planning application process and conditions attached to planning as a significant barrier. And 14% deemed available land at a suitable price a major challenge.

The report makes a number of recommendations to address these barriers and help SMEs grow. On finance, the government's Builders Finance Fund should be promoted for smaller builders, NHBC said. It added that banks should be more flexible “to reflect the cash flow challenges of developing a site”.

To ease planning for SMEs, NHBC recommended speeding up the planning decision process and the process of clearing conditions. And to tackle land issues, information on land availability should be easier to access, with the government offering small parcels of land on larger sites.

Neil Smith, NHBC’s head of research and innovation, said:

“Small housebuilders and developers have made a significant contribution to the UK’s housing output over the years.

“We must make it a priority to address these barriers if small housebuilders and developers are to prosper and make a greater contribution to the housing market recovery.”

The research also shows that the number of housebuilder SMEs halved between 2007 and 2013, with just 2,710 estimated to have been active last year.