11 THE INDUSTRY ADVOCATE
SURVEYING THE INDUSTRY
Brian Berry of the Federation of Master Builders (FMB)
Brian Berry, chief executive of the FMB, explains the company’s annual House Builders’ Survey, and explores what the Government could do to alleviate the issues found.
targets, unless we diversify the supply of housing and once again enable the growth of small and medium-sized (SME) housebuilders. In the late 1980s, two-thirds of all new homes were built by small local housebuilders, but this now stands at less than one quarter. This repre- sents a significant loss of capacity, diversity and healthy competition in our industry. Reviving the fortunes of SME builders undoubtedly has a key role to play in delivering the 300,000 homes needed every year in England alone. The Federation of Master Builders’ (FMB) House Builders’ Survey is an annual snapshot of the business environment SME housebuilders are operating in. It reveals what barriers are preventing small housebuilders increasing their output. This research is of real interest to policy makers who need an industry that is growing in capacity and diversity rather than dwindling. The survey has consistently shown that the most prevalent concern for SME housebuilders is the lack of available and viable land, which for SME builders means small sites. In fact, accord- ing to the 2018 survey, 59 per cent of SME housebuilders cite the lack of suitable sites as a barrier to increasing their output, making it the top barrier for four years in a row. Worryingly, nearly two-thirds of respondents believe that the number of small site opportunities is actually decreasing.
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Small and medium-sized sites can make a huge contribution to meeting the housing requirement of an area, and are often built out relatively quickly. However, there is a tendency for local authorities to concentrate on the deliv- ery of new homes on large sites mainly suitable for large housebuilders. Recent reforms in the National Planning Policy Framework (NPPF)
ost policy makers in central and local government now accept that we will struggle to meet housebuilding
are fundamental to tackling this. As part of the reforms, a new section of the NPPF stipulates that local planning authorities must identify sites no larger than one hectare sufficient to deliver at least 10 per cent of their housing delivery on sites. By making good on this requirement, local authorities will put in place an ongoing pipeline of opportunities to smaller firms. The survey gives some grounds for optimism on this score, finding that 40 per cent of builders believe that, perhaps as a result of the changing policy landscape, small sites are being taken more seriously by planners and local authorities. Another key issue is the problem SME builders face accessing the finance they need to build. The results of the latest survey show that nearly half (46 per cent) of SME builders believe problems involving finance are a major barrier to their ability to increase their output. “Poor loan-to-asset-value ratios” was rated as the most significant finance-related barrier ahead of “limitations on business overdraft facilities” and significantly ahead of “refusal of loans”. This suggests that the terms on which finance is available is now the most pressing finance- related concern.
There have been initiatives put in place to address access to finance, such as the Government’s Home Building Fund that was created specifically to improve access to finance for small housebuilders. Though there will always be limits to the reach of a scheme-by- scheme loan fund administered by a Government agency, Homes England deserve credit for the fact that the Home Building Fund has been better tailored to smaller builders. It has generated a higher uptake than any previous scheme and has undoubtedly been a real help to the sector. This year’s survey suggests how Government policy could now go further in improving access
THE ACUTE SHORTAGE OF SKILLED LABOUR IN CONSTRUCTION IS ALSO FAST RISING UP THE LIST OF CONCERNS FOR SME BUILDERS AND DEVELOPERS
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