Lack of available land main barrier for SMEs

New research has indicated that a lack of finance and available small sites are the top obstacle for new home construction according to SME house builders.

The report from the Federation of Master Builder’s found that 62% of respondents cited a deficiency in viable and available land as the main barrier to delivery of new homes. Just over half (54%) felt that the number of small opportunities for small site development is falling.

Another barrier highlighted by the survey was finance accessibility, with 54% stating that it was hindering their ability to deliver more homes.

A lack of skills was also seen as an obstacle for 42% of those asked, who mentioned that a shortage of skilled workers was delaying new home construction.

Commenting on the survey results was Brian Berry. The Chief Executive of the Federation of Master Builders’ highlighted the various barriers that small house builders face, and a need for Government initiatives to come into effect as soon as possible.

“Almost a decade after the financial crisis, access to finance for small house builders is getting worse instead of better. The results of the FMB House Builders’ Survey suggest a slight worsening in the problems these firms face in accessing the finance they need to build. Assessments of lending conditions to SME developers were down slightly from 2016, the first fall in this measure since 2013. Small house builders express generally positive views of some recent Government initiatives in this area, such as the Home Building Fund, but we clearly need to double down on these efforts to make sure that SMEs have access to the finance they need to build Britain out of its housing crisis.

“Our research also affirms just how vital it is that the Government acts on key proposals in the  Housing White Paper, published earlier this year and designed to increase the opportunities for smaller scale development. Nearly two thirds of SMEs say that the lack of available and viable land is a major barrier to increasing output, the most commonly-cited barrier for the third year in a row. More worryingly still, over half say that the number of available small sites is, if anything, decreasing. The White Paper quite rightly emphasises the need to diversify the house building sector so it is less reliant on a small number of large house builders. In order to do this, we need the Government to make good on its proposals to improve the availability of small sites and speed-up the planning process for small sites.”

Berry concluded by drawing attention to the potential impact of Brexit, highlighting that the skills shortage could be worsened if free movement comes to an end.

“Over the next three years, half of SME house builders believe skills shortages will act as a major constraint on their ability to grow and this concern is now beginning to overtake more typical frustrations such as the planning system. If we get it wrong, Brexit and the end of free movement could further exacerbate the skills shortages we already have. The survey finds one third of SME house builders currently employ EU workers and this rises to 70% in London and the South East. The potential impact of post-Brexit immigration changes is therefore a cause for concern among small house builders. That’s why it’s so important that the Government introduces a transitionary period that allows the UK house building sector to gradually wean itself off high levels of EU labour.”

The full results of the survey can be accessed here. 

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