SME house
builders: boosting
diversity in
housing supply
Andrew Dixon
Head of Policy, FMB
Federation of Master Builders
• Established 1941
• UK’s largest employers’ body for SME
construction firms
• UK wide coverage
• Independent inspections for all members
• Warranties
• Customer complaints service
Herts Housing 24.04.17
Agenda ......
1. The position of SME house
builders…
2. Barriers to growth…
3. Current policy…
4. LAs and SMEs working in
partnership…
Herts Housing 24.04.17
SME house builders
Shrinking supply…
• Decline in SME housing building
• 1988: 66%
• 2016: 23%
• Firms building <100 fell by half since 2008
• Huge loss of capacity and reduced competition
Herts Housing 24.04.17
SME house builders
More than just supply….
• Local growth and local jobs
• Skilled employment - SMEs employ 2/3
construction apprentices
• Small and brownfield sites
• Quality
• Diversity
Herts Housing 24.04.17
SME house builders
Three key barriers ……….
1. Availability of suitable, viable smaller sites
2. Availability of finance
3. Cost, complexity and delay in navigating
planning
Herts Housing 24.04.17
SMEs: barriers to growth
1. Availability of small sites
•
•
•
•
67% view land availability as major constraint
Most pronounced for sites smaller than 10 units
Scarcity about size, location, planning & price
Complex set of causes….
i. Treatment of smaller sites within plan-making
process
ii. Disproportionate resistance to infill development
iii. Price expectations of landowners
Herts Housing 24.04.17
SMEs: barriers to growth
2. Access to Finance
• FMB House Builders’ Survey 2016 – 50% cite
access to finance as major constraint
• Banks reluctant to lend for small developments
• Lending terms unfavourable
• Significant improvement in last two years - mainly
from alternative lenders
Herts Housing 24.04.17
SMEs: barriers to growth
3. Cost and delay in planning application
process
• Significant investment of resources, limited certainty
of outcome
• Pre and post permission delays hit cashflow and
increase cost of financing
• FMB House Builders’ Survey 2016
o Biggest cause of extra cost: info requirements
o Biggest cause of delay: under-resourced planners
Herts Housing 24.04.17
Current policy environment
Housing White Paper:
• Strong focus on small sites and
speed of delivery
• 10% of allocations to be ½
hectare or less
• ‘Great weight’ given to small sites
• Opportunities for SMEs on larger
• Housing Delivery Test
• Movement on planning resources
SMEs and Housing Supply 29.11.16
Herts Housing 24.04.17
Current policy environment
Other key initiatives:
•
•
•
•
£3 billion Home Building Fund
Permission in Principle
Brownfield Register
10 unit threshold for affordable
housing
SMEs and Housing Supply 29.11.16
Herts Housing 24.04.17
FMB & LGiU small sites research
Context:
• 67% SME house builders say lack
of small sites is a major barrier to
building more homes
• Government keen to get more
small sites going
• Interest from LAs in working with
SME builders
• Aim: improved focus on smaller
sites and the potential for LAs to
work with SMEs.
FMB & LGiU small sites research
Research:
• FMB and Local Government
Information Unit (LGiU)
• Survey of local authorities and
FMB members
• Roundtable workshops with
builders and LAs
• Interviews with planning officers
• Case studies of good practice
Small sites: key findings
• 70% of councils deliver fewer than 40% of homes on
sites smaller than 1.5 hectares
• 79% SME builders think the planning application
process for small sites ‘too heavy handed’
• 64% builders and 45% of LAs see under resourcing of
planning depts. as barrier to small sites
• 55% of LA respondents said quality of planning
applications for small sites often poor
• 80% SME builders said LAs in their area do not
proactively communicate or engage with them
Small sites: key issues
• Allocations in local plans: builders want councils to
identify and allocate more small sites; planners see this
as resource-intensive and time-consuming
• Small sites more difficult: LAs acknowledge privately
small sites can be more difficult (politically and
administratively)
• Planning bureaucracy: builders see planning for small
sites as too bureaucratic; only 14% of planners agree
• Impact of under-resourcing: both sides agree; impacts
on application process and ability to be proactive
• Engagement: 79% of LAs said they actively engage
SMEs in plan-making process; only 4% of SMEs think so
Small sites: recommendations
1. Councils should improve their strategic engagement
with SME builders - developer forums, online portals,
workshops
2. Councils should be required to include strategic
consideration of small sites within local plans
3. Councils should seek to reduce complexity and
uncertainty in the planning application process
4. Councils should use their land assets more
creatively and look to broker between landowners
and SME builders where possible
Herts Housing 24.04.17
Small sites: recommendations
5. Government should give councils power to set
and vary planning fees locally, if revenue can be
ring-fenced and good service guaranteed.
6. The industry, led by the FMB, should produce
‘best practice’ guidance for small builders on
planning for small sites.
Herts Housing 24.04.17
Good practice: case studies
Birmingham City Council
• Large number of small garage
sites
• Required new partnerships
• On-line planning portal
• Dynamic purchasing system
• De-risking sites
Good practice: case studies
Leeds Council
• Monitoring of SHLAA
• Analysis of sites not coming
forward
• Interventions can include:
o Signposting to funding
o Brokering relations between
landowners and developers
o Assistance with planning
Good practice: case studies
NE Lincolnshire Council
• Local Development Forum
Barnet Council
• Specialised pre-application service
providing premium fast track
planning support for a fee, with
dedicated lead officer.
Local authorities and SMEs
General principles for a partnership approach:
•
•
•
•
•
•
Ongoing engagement
Strategic view of small sites
Improved mutual understanding
More upfront clarity in planning
Rationalising processes
Flexible, proactive approach to
small sites
Questions?