Shadow Housing Minister Emma Reynolds has called for “an army of small builders” to help deliver the number of new homes needed to address the housing crisis, in a speech to the National House Building Council. But what steps exactly are being given to SME builders, in order to help them break the monopoly of the top 10, who currently build almost two thirds of new homes built in the U.K.
In September last year, the Housing Delivery Fund was a loan scheme designed to do just this, by providing a funding steam that would allow SME developers to progress sites and deliver more affordable homes across England, on time and on budget.
Barclays Chairman John McFarlane stated that ” There’s a vital need across the country to build more good quality homes across the country, this 1bn fund is about doing exactly that”.
But not everyone will get or has got a slice of this pie, so where to now for the SME builder? What are the barriers that are making life so hard?
Planning remains the biggest challenge facing their business, as it’s easier for the local authorities to deliver their housing targets via the larger strategic sites that volume builders can bring forward, rather than the smaller, infill plots that the SME’s often can offer. It can also cost up to £50k to submit a planning offer, a sum that a smaller business cannot afford to lose. Steps have been taken by the government to relax the contributions of affordable housing developments of 10 units or less.
Access to finance was identified by a NHBC survey, as the second biggest challenge to small house builders.
“These guys can get project finance, but you can’t get rolling finance for business, which you need if you want to run a business with five, six or seven sites” Ex-HBA chief executive Humber.
Another common complaint is that smaller house builders find it hard to prove that their annual turnover is sufficient in relation to the size of the contract being offered. Thus potentially putting off potential public sector clients awarding the work.
The APPG has been created as a response to these issues and hopes to overcome them by creating a voice in Westminster that specifically speaks for the SME’s, thus making an impact on the currently required 300,00 a year housing crisis.
Brett Amphlett, BMF Policy and Public Affairs’ Manager, said: “The BMF welcomes renewed efforts to support and mobilise SME firms that are the customers of merchants…The objective of this APPG chimes with BMF work to change the ratio between volume housebuilders and the other vital players in the market. Andrew Lewer and other MPs involved have practical, real-world knowledge from their days before election to Parliament to contribute to help solve today’s housing crisis. I am grateful to Mr Lewer for inviting the BMF”.
The next meeting of APPG for SME house builders is to be held in February.
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