Boost for small builders has to be worth trying! - Park Lane

Boost for small builders has to be worth trying!

Boost for small builders has to be worth trying!

Interesting article in Planning Resource this week by Joey Gardiner below. Joey Gardiner is special correspondent for Planning so Its good to see that the longstanding land supply problems have at last been acknowledged centrally and that the forthcoming NPPF revisions will in all likelihood reflect this concern. Let’s hope that Local Government will support this proposal.

Boost for small builders has to be worth trying!

The supposed collapse of the UK’s small housebuilding sector has long been lamented as one of the principal contributory factors to the housing crisis. Thirty years ago, four in ten new homes were built by small and medium-sized (SME) builders, according the Home Builders Federation. Now it is barely one in ten. Moreover, since the 2008 financial crisis, one in three SME housebuilders has shut up shop.

So last week’s government confirmation that it intends to write an Autumn Statement pledge that 20 per cent of local plan housing numbers must in future be from small sites into the upcoming revision of the National Planning Policy Framework is potentially big news. Certainly, small builders have long complained of a planning system seemingly stacked against producing the small sites that are their lifeline.

It is obvious why cash-strapped local authorities would focus limited plan-making resources on allocating larger sites that can deliver more homes. However, SMEs also complain that when they do make windfall site applications, these are not viewed positively. Councillors, they say, too often see small infill sites as headaches that generate vocal opposition for little gain.

Bodies that represent small builders such as the Federation of Master Builders (FMB) are, of course, delighted by the news. An FMB survey in 2016 put the allocation of more small sites top of its policy wish list. And, of course, these measures are part of a package of recent initiatives – such as the current attempts to lighten affordable housing obligations and the introduction of permission in principle – designed to achieve a renaissance in these firms.

Small developers say the risk of bringing forward unallocated small sites through the planning process is a big part of what holds them back. Bodies such as the SME-focused House Builders Association maintain that small builders will have no trouble bringing more than enough sites forward, and that their allocation would pay dividends in the delivery of housing numbers.

Yet some have their doubts. Clearly it is not just planning risk that holds back SME builders. Lots of other cards are stacked against them. Interest rates on their loans are much higher – typically more than ten per cent – and come with additional inspection fees. The relative cost of the planning process is also far higher where small companies incur a similar information burden to larger ones. One architect working with SME developers cites a recent project in which 35 per cent of the total bill was swallowed by financing costs and professional fees. He adds that the developers he works with have walked away from eight out of ten recent development opportunities, saying most are simply not viable.

Given these challenges, it is therefore to argue that this policy could inadvertently end up creating a worst of all possible worlds in which allocated small sites don’t get built out but delivery on larger sites is simultaneously restricted. But it’s a chicken-and egg-situation. Without making an attempt to allocate more small sites, the continuing decline of SME housebuilders looks irreversible. This policy may not be a dead cert, but it has to be worth trying.

credit – 22 February 2018 by Joey Gardiner

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