Planning delays, a lack of providers for affordable homes, and local opposition are the top concerns for small to medium (SME) house builders, according to research by Close Brothers Property Finance, the Home Builders Federation and Travis Perkins.
Small developers said these issues – along with the previous Conservative Government’s anti-development stance, and tough economic conditions – have made it harder to operate compared to five years ago.
The State of Play report 2024/25, found that more than half (51%) of SME home builders wait over a year to obtain planning permission.
Additionally, 56% have seen a 30% increase in the cost of planning permission.
90% of builders cited the implementation of the Biodiversity Net Gain regime, which began this year, as a barrier to growth.
Many believed that local authorities lacked the resources to help achieve the required net gain.
Around 42% of SME builders identified nutrient and water neutrality restrictions as a significant barrier, while 47% flagged land availability as a concern.
Furthermore, 80% reported that obtaining suitable offers for Section 106 Affordable Homes was an obstacle to growth.
Phil Hooper, chief executive officer of Close Brothers Property Finance, said: “In the five years in which we’ve produced the State of Play report, we’ve had a global pandemic, eight Housing Ministers and had 14 consecutive interest rate rises.
“Mandatory housing targets have been scrapped and subsequently reintroduced and uncertainty about nutrient neutrality laws, which still haven’t been resolved, has held up delivery of 160,000 new homes.
“It’s little surprise then that two-thirds of SME home builders say it is harder to be an SME housebuilder now than it was half a decade ago.
“The pro-building rhetoric coming from Westminster is promising but needs to be backed up by concrete action to get Britain building again.”
Neil Jefferson, chief executive officer of the Home Builders Federation, said: “SME home builders play a vital role in addressing the housing crisis, yet the mounting constraints on housing delivery in recent years have placed considerable strain on many small businesses.
“Recent planning changes are very positive but there are a number of determinants on housing supply and Government will need to pull additional policy levers if it is to achieve its ambitious housing target.
“Ensuring local authority planning departments have sufficient capacity to process applications efficiently is key.
“Government needs to do more to support prospective buyers, in particular young people, to access suitable mortgage finance.
Jefferson added: “The supressed level of demand reduces the industry’s ability to invest in new sites and its supply chain and so accelerate the delivery of private and affordable homes.
“We also need solutions to the nutrients issue and for Housing Associations to be put on a firm financial footing, so they can take on the affordable housing delivered by home builders – both of which are significant barriers to SMEs in delivering much-needed homes”
Ben Todd, managing director at Travis Perkins Managed Services, said: “SME housebuilders provide jobs, boost the local economy, and create homes that offer safety, security, and a sense of community across the UK.
“This is why at Travis Perkins we’re proud to work alongside HBF and Close Brothers Property Finance to advocate for SMEs to be supported further.
“Reforms to the planning system, financial incentives, and targeted support for SMEs are essential to support and lay the groundwork for a housing sector that is more resilient, diverse, and capable of meeting the pressing demand for homes.”
