The recently published Home Builders Federation Report - State of Play: Challenges and opportunities facing SME home builders – highlights the difficulties faced by the development industry, but none more so than SME housebuilders, who often do not have the luxury and safety net of a robust strategic land bank to build out.
The 2023/24 report, published on Monday 22 January 2024, shows:
- 93% of SMEs cite delays in securing planning permission as a major barrier to growth.
- Nine out of 10 (91%) say planning departments in local authorities are under-resourced, which is hindering growth of SME home builders.
- 46% of SME developers say the cost of obtaining planning permission has risen by over 30% in the past three years – even before December’s planning fee rises were introduced.
- Almost three-quarters (72%) claim interest rate rises have been a major obstacle in the past year.
- Just 13% think the Government’s current approach on housing and planning was positive for first time buyers (down from 39% in 2022).
Richard Foxon, Managing Director of Newton LDP says; “I do not expect this situation to improve in the short term, with a General Election on the horizon, there will be even more political jostling than we have seen of late, which will undoubtedly further impact the already failing planning system – exacerbating the housing crisis and further limiting the supply of much needed market and affordable homes.
“In more positive news, with the Bank of England’s Monetary Policy Committee voting to maintain interest rates today, there is an expectation that Interest Rates may start being reduced by the Summer. We are already seeing many High Street lenders reducing their mortgage rates and affordability pressures starting to ease. Furthermore, Nationwide’s House Price Index published yesterday indicates that house prices rose 0.7% month-on-month, ahead of expectations, which is a trend which expect to see throughout 2024, as demand outstrips supply".