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Top 3 barriers facing SME builders and developers

SME house builders and developers are continuously being held back by external factors that stop them to build faster and more efficiently. We analyse the most common challenges they face to increase their production of new homes.

Last year’s Federation of Master Builders (FMB) House Builders’ Survey revealed the challenges and constraints SMEs builders and developers face to increase their production of new homes, and offered some figures as to what to expect in the upcoming years.

Based on the survey results, we’ve identified the top 3 barriers SMEs have to overcome and how they impact their ability to build new homes.

  1. Bureaucracy and planning

SME house builders and developers are continuously being held back by the planning system, causing delays to their builds and an increase in costs.

Survey respondents were asked various questions to assess the amount of bureaucracy, cost, and delay involving the planning system. 43% believe the burden of information requirements for planning applications is increasing, and only 5% think it’s been a decrease. Among different factors, respondents rated ‘excessive information requirements’ as the most significant cause of delays in the planning application process.

 

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  1. Land Availability

England has plenty of land available to be built on. However, access to that land is the most common cited barrier for SME builders and developers. 67% of them claim that lack of available and viable land is the main problem facing their business.

  1. Access to finance

Finally, FMB survey revealed that for those who work only as contractors, limitations on overdraft facilities remain a big cause of concern. Respondents pointed out how they would like to see changes in the approach debt providers and financial investors take to fund housing developments. Common suggestions on what processes should improve were:

  • Speedier decision-making, as to reduce the time of the process
  • Improved loan-to-value rations
  • More tailored approach to providing finance that takes into consideration the history of the company and its good practices

 

The Home Builders Federation (HBF) alerted that if barriers were removed, SMEs could deliver 25k more homes a year, and therefore become a driving force to tackle housing crisis. HBF also suggests a number of steps the Government could be taking to help this become a reality. Among them we find the necessity of providing more technical and planning advice for unexperienced business, as well as lifting barriers and unnecessary red tape for builders to access tax incentives and other support SMEs enjoy in other sectors.

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