Caroline Carter and Rosie Foster write for Placemaking Resource on the need for greater support for SME housebuilders

The government's recent policy changes to support SME housebuilders do to a degree solve some issues but new regulations look set to bring fresh risks.

Labour's pledge to "get Britain building again" has stirred considerable interest within the
housebuilding sector, as the nation grapples with an escalating housing crisis. Recent policy announcements have outlined Labour's strategy to achieve their ambitious target of providing 1.5 million new homes by 2029, with a particular focus on supporting small and medium-sized enterprise (SME) developers.

The decline in homes constructed by SME housebuilders is stark; in 1988, they delivered 39 per cent of new homes, compared to just 10 per cent today. This downturn can be attributed to rising costs of materials and labour shortages, combined with a lack of access to finance options and suitable land availability. A well attested key challenge is also the slow and bureaucratic planning system, which has grown increasingly complex in recent years and creates a disproportionate burden on smaller housebuilders.

Caroline Carter, Senior Associate in our Corporate team, and Rosie Foster, Associate in our Real Estate team, explore this topic in an article for Placemaking Resource.

They explain that the government has recognised that SME developers currently face the same planning hurdles as larger housebuilders. Over the summer, a suite of new policies was introduced to support SME developers and streamline the planning process for smaller sites. They continue:

Overall, the policies to support SME developers have been welcomed by the industry and they provide clear solutions to some of the issues the industry has faced in recent years. However, if developers continue to face increasing regulation and rising costs, this could have a negative impact on the number of homes being built. The government needs to remove, rather than create, barriers for housebuilders if overall output is to improve.

"There are already reasons for optimism with the government’s newly announced housebuilding policies; the government announced last week that their New Homes Accelerator initiative has reportedly helped unblock and expedite the construction of nearly 100,000 homes. However, when it comes to reforms to our planning system, it may take a number of years before we see any meaningful impact.

Read the full article in Placemaking Resource here (subscription required).