A lack of available land is holding back housebuilding with two thirds of small and medium-sized enterprises (SMEs) struggling to identify areas for development, new research reveals.
For the second consecutive year, the Federation of Master Builders (FMB) annual House Builders’ Survey shows SMEs have nowhere to build with 67 per cent citing a “lack of available and viable land” as the biggest barrier.
The trade association study also found that half of SMEs are finding the planning system challenging with a further 50 per cent struggling to access finances.
Of the 108 respondents, 39 per cent believe the skills shortage is now a huge hindrance to building more homes – up from last year’s 27 per cent.
According to the report, the main cause of delays is the under-resourcing of local authority planning departments while, despite Brexit, the majority of SMEs believe demand for new homes remains strong.
To combat the current planning issues, Brian Berry, chief executive of the FMB, says councils need to allocate and grant permission for more small sites.
“The current focus on large sites is squeezing out smaller developers, which is reducing competition in the housing market at a time when we need more, not less, choice,” he says.
“The limited supply of opportunities for small scale development is one of a number of key structural constraints that has seen the number of homes built by SMEs decline from around two thirds in the late 1980s to less than a quarter today.”
Berry says that while the Government has attempted to remove red tape in an effort to increase the number of new builds, “it would appear that its reforms have yet to make a difference”, with 95 per cent of SME house builders reporting the information demands being placed on them during the planning application process has either increased or remain as bad as they were before.
“It is absurd that the planning system treats a 300 home application in largely the same way it treats a three home application,” he says.
Berry is now calling on the Government to renew its focus on granting planning permission to small sites and press ahead with its proposed planning reforms, including a presumption in favour of small scale development.
“SME house builders must be seen as a key component of the Government’s housing strategy,” he says.
“Planning departments also need to be adequately resourced so that they have the capacity to engage more closely with SME house builders and ensure planning applications are processed through the system as speedily and efficiently as they can be.”