Commercial News

What key changes would reinvigorate the SME building sector?

Rozi Jones -
31st July 2018
SME house builder
"Time and again developers large and small tell us that their biggest frustration is with the UK’s underinvested planning system "

A United Trust Bank poll amongst brokers working in development finance has revealed the three key changes they believe would aid the regeneration of the SME house building sector.

Brokers say reducing red tape, tackling land banking and increasing the threshold of a ‘small’ site classification from 10 to 20 units are the keys to regenerating the sector.

Other ways to increase building included providing a greater choice of development finance funding, reducing the cost of borrowing for SME house builders, and the creation of a government led ‘Help to Plan’ service providing planning support to new house builders.

Noel Meredith, executive director of United Trust Bank, commented: “We concur with many of the changes brokers believe would help to reinvigorate the SME housebuilding sector. Time and again developers large and small tell us that their biggest frustration is with the UK’s underinvested planning system and unfortunately the challenges seem to be greater for SMEs. As well as the high cost of obtaining planning permissions, development can also be constrained by local political agendas and nimbyism which can create uncertainty for developers who need certainty when they’re expected to commit considerable capital to new building projects. Changing the classification of a ‘small’ site to include those with up to 20 units, or at least demonstrating some flexibility to recognise when sites are clearly SME projects, would also help to alleviate the bureaucratic burden on smaller housebuilders. A ‘Help to Plan’ initiative supporting new, smaller housebuilders through the planning process also has some merit although we would prefer to see the whole system simplified and improved rather than committing money and resource to helping new house builders negotiate the labyrinthine system we currently endure. 

“Accusations of land banking levelled at national house builders were largely quashed by the recent Letwin Review although there’s some evidence that the volume builders are managing completions to meet demand rather than flood the market. It’s hard to criticise this position.  However, the lack of skilled construction workers, specifically bricklayers, was seen as having a more negative impact on the UK reaching its new homes target than housebuilders acquiring sites for future development. Brexit uncertainty won’t help to fill the labour shortage and the aim is to attract and train 15,000 new bricklayers over the next five years. That’s a big ask from the industry.

“There’s no question that a vibrant SME house building sector benefits the property market and the economy. SMEs often take on smaller, brownfield sites which present challenges larger volume builders have neither the specialism nor inclination to tackle. At UTB we’re keen to help smaller house builders grow their businesses and continue to support them in making a significant contribution to the UK’s new homes target.”

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