Tear down barriers to help diversify the housing market, says FMB

Small house builders, who account for just ten per cent of all new homes built across the country, won’t be able to increase their market share unless a series of barriers are removed, says a new report, ‘Supporting SME Housebuilders: Challenges and Opportunities’, commissioned by the Federation of Master Builders (FMB) from the London School of Economics and Political Science (LSE).

Brian Berry, Chief Executive of the FMB said: “The research recognises the value that small house builders can bring to the housing market in terms of greater consumer choice and quality. The UK has an unusual housing market structure compared to other developed nations, with a high reliance on a small number of volume house builders. The Housing Minister, Mathew Pennycook MP, says he wants to diversity the housing market and restore the number of smaller house builders to the market, but to achieve this aim many hurdles need to be overcome. One of the biggest barriers is the failure of local authorities to allocate sufficient small sites for development in their Local Plans – something that was notably overlooked in the Government’s changes to the planning system announced last week.”

Berry continued: “The research reveals that the housing market cannot be relied upon to readjust to deliver the type of SME housing output seen in the 1980’s, when they accounted for 40% of all new homes. Government intervention is needed if we are to have a more diverse housing market. This includes the introduction of government backed low-interest loans and more affordable funding options. The research also highlights the current skills crisis calling for a greater focus on apprenticeships, training, and pathway for school leavers.”

Christine Whitehead, Emeritus Professor of Housing Economics at the LSE and one of the report’s authors said: “SME house builders are equipped with unique skills and local expertise, with many wanting to expand their businesses. But to leverage their impact on the market they must overcome barriers, many of which disproportionately impact smaller house builders compared to larger developers. SMEs can deliver high quality products, and they reportedly want to play more of a role in greening homes and the self-build market, which all offer opportunities for growth. While smaller house builders clearly could play more of a role in the market by providing homes to match local need, boost the local economy and build upon unused land, to name a few, they are held back an environment that offers up too many barriers for growth”.

 

LSE Research Key Findings

  • SME housebuilders are crucial for:
    • Local expertise and flexibility in smaller or complex projects overlooked by larger developers.
    • Development of awkward sites (e.g., ex-industrial land, repurposed buildings).
    • Strong community connections and focus on quality.

 Barriers Faced by SME Housebuilders

  • Planning System:
    • Delays, complexity, fragmented processes, and lack of local authority (LA) resources.
    • Perceived bias towards larger developers.
  • Land Market:
    • Difficulty accessing suitable and affordable land.
  • Finance:
    • Insufficient access to affordable funding and high upfront costs.
  • Labour and Materials:
    • Shortages in skilled labour and rising material costs.
  • Regulations:
    • High burdens related to environmental and heritage preservation.

Opportunities for Growth

  • Leveraging quality and customisation as unique strengths.
  • Potential for growth in green buildings, self-builds, and high-end properties.
  • Collaboration with local authorities on small-scale or brownfield developments aligned with regional goals.
  • Promoting innovation, sustainable practices, and local employment.

Recommendations for Change

  • Planning System:
    • Streamlining processes and identifying more SME-suitable land.
    • Reducing regulatory complexity and planning fees.
  • Finance:
    • Government-backed low-interest loans and more affordable funding options.
  • Skills Development:
    • Greater focus on apprenticeships, training, and pathways for school leavers.
  • Support Mechanisms:
    • Partnerships between SMEs and larger developers to enhance competitiveness.
    • Improved support for sustainable building practices and reduced development costs.

Conclusions

  • Targeted government interventions are essential to:
    • Create a level playing field between SMEs and larger builders.
    • Address critical barriers to unlock SME potential, leading to increased housing variety, sustainable practices, and innovation.
  • Proposed measures include low-interest loans, apprenticeship schemes, and reduced costs, fostering sector-wide benefits.

 

EAN Breaking News

Breaking News from the team at Estate Agent Networking. Have a new story to share with us? Then please get in contact today! When and where we can we will refer to third party websites with a 'live link back' where news was released first.

You May Also Enjoy

Breaking News

Popping the Asking Price Bubble

Where in the Uk Can Buyers Snap Up Property Bargains and Where Properties Go for a Premium Above Asking Price   New research from fast selling property company, Upstix has uncovered the UK’s most surprising postcodes for snapping up a property at bargain prices this year, highlighting a widening gap between sellers’ expectations and the…
Read More
Rightmove logo
Breaking News

Highest demand to lease office space since pre-pandemic

The latest insights from the UK’s number one commercial property website Rightmove, reveals that the number of unique enquiries to lease office space is at its highest point since pre-pandemic, as businesses look for spaces that meet modern requirements. Demand to lease office space is 19% higher than the same period a year ago and…
Read More
Planning disputes on new build land
Estate Agent Talk

Planning consultations for major infrastructure to be streamlined

Robert Bruce, a planning and infrastructure partner at law firm Freeths LLP, said he: “Welcomed the change as a significant step to speeding up the DCO process and the focus on the quality and effectiveness of the consultation, rather than box ticking and a risk averse approach to pre-application consultation due to the current legal…
Read More
Breaking News

‘The property ladder pulls further away’ warns Open Property Group

For many first-time buyers across England, the dream of homeownership continues to slip further out of reach. Despite rising wages, soaring house prices are making it harder than ever to get on the property ladder. A leading UK professional house buying company ‘Open Property Group’ based in Buckinghamshire UK, has raised concerns over the ongoing…
Read More
Estate Agent Talk

How Long It Takes to Buy a House in the UK: 5 Common Delays That Can Slow Down Your Home Purchase

Wondering how long it takes to buy a house in the UK? The average timeline ranges from 8 to 22 weeks, but even that can stretch significantly due to unexpected delays, especially if you’re a first-time buyer or caught in a chain. That’s why working with experienced professionals like Belvoir — one of the UK’s…
Read More
Love or Hate Rightmove
Breaking News

Rightmove to host Renters’ Rights Bill webinar with Guild of Lettings

Rightmove is hosting a live and interactive webinar session with the Guild of Lettings to help agents get Renters’ Rights Ready. The webinar will take place from 10:00am – 11:00am on Wednesday 23rd April. Susie Crolla, Managing Director for the Guild of Lettings, will be joining Rightmove to help agents with questions they may have about…
Read More