Smaller house-builders struggle to find finance

A LACK of available small sites andshortgage of finance top the list of barriers to SME house-builders increasing their delivery of new homes, according to new research by the Federation of Master Builders’ (FMB).

Key results from the FMB’s House Builders’ Survey 2017 include:

Over half of small house-builders (54%) say accessing finance is a major barrier to their ability to build more homes (up from 50% in 2016);

A lack of available and viable land is the most commonly cited barrier (62%) to increasing output and 54% believe that the number of opportunities for small-site development are decreasing;

42% of SME house-builders said that a shortage of skilled workers is a major barrier to their ability to build more new homes, and this rises to half (49%) when asked to look ahead over the next three years;

One in three small house-builders that employ EU workers believe the end of free movement will be a major constraint on their ability to build more homes;

Half (49%) of SME builders view the planning system as a major constraint on their ability to grow and “inadequate resourcing of planning departments” was again rated as the most significant cause of delay in the planning application process.

FMB chief executive Brian Berry said: “Almost a decade after the financial crisis, access to finance for small house-builders is getting worse instead of better.

“The results of the FMB House Builders’ Survey suggest a slight worsening in the problems these firms face in accessing the finance they need to build. Assessments of lending conditions to SME developers were down slightly from 2016, the first fall in this measure since 2013.

“Small house-builders express generally positive views of some recent Government initiatives in this area, such as the Home Building Fund, but we clearly need to double down on these efforts to make sure that SMEs have access to the finance they need.”

“Nearly two-thirds of SMEs say that the lack of available and viable land is a major barrier to increasing output, the most commonly cited barrier for the third year in a row. More worryingly still, over half say that the number of available small sites is, if anything, decreasing.”

He added: “Over the next three years, half of SME house-builders believe skills shortages will act as a major constraint on their ability to grow and this concern is now beginning to overtake more typical frustrations such as the planning system. If we get it wrong, Brexit and the end of free movement could further exacerbate the skills shortages we already have.”