A survey of SME home builders has identified planning system failings and falling buyer demand as two key factors in the fall in the number of new homes being built.
The Federation of Masters Builders’ (FMB) House Builders’ Survey, which has been running for a decade and keeps track of the experience of micro, small and medium-sized house builders in England, has identified planning issues, restricted mortgage availability, access to suitable land, materials costs and financing are the top reasons for falling new homes amongst the SME house building industry.
The 2023 report highlights the issue of mortgages as a key trend, with 51% of members picking this option; a steep rise over the last two years.Buyer demand for homes in England has hit its lowest recorded levels since the annual survey was launched in 2015, with an average score of 1.99 (rated out of 5, with 5 being very good and 0 being very poor).
Brian Berry, Chief Executive of the FMB said:
“This year’s FMB House Builders’ Survey shows that the housing market for smaller house builders, is in an increasingly difficult place, with perceived buyer demand hitting the lowest levels since our records began in 2015. There are signs this will pick back up again, but the already beleaguered SME housing sector, which delivers a fraction of the market share it once did, at around 10% compared to 40%, just over 30 years ago, looks like it will limp into next year.”
“The planning system tops the list of major barriers stopping small builders from delivering new homes. While the impending rise in planning fees may help in the short term to prop up struggling planning teams, there are fundamental issues at play. For small builders the survey is clear that the system is too complex and costly. Communication from local planning authorities is also poor.
“Without changing this, planning issues are likely to loom large as a barrier for some time. Lack of available land is also frustrating small builders and without proper incentives for local authorities to promote small sites it seems unlikely there will be much change.”
Concluding
“The economic landscape is also affecting small builders. Restricted access to mortgages has become the second biggest barrier. This issue has seen a rapid rise over the last two years, reflecting the devastating impact the wider economy can have on the small house builders. With many consumers choosing not to take out mortgages it would appear the market is only getting smaller, resulting in less homes being built.”
