Future of small and medium-sized housebuilders

Summary

Housing is a devolved matter in Scotland, Wales and Northern Ireland. The background and statistics in this debate pack therefore cover England only.

Overall housebuilding trends

Official statistics from the Department for Housing, Communities and Local Government (DLUHC) show that overall housebuilding in England decreased during the financial crisis in 2007 and 2008. The number of net additional dwellings completed each year reached a low point of 124,720 new homes delivered in 2012/13. Supply began to rise year-on-year after this point, reaching a high point of 242,700 new homes in 2019/20. Supply declined during the Covid-19 pandemic in 2020/21 but rose again in 2021/22.

Housebuilding by SMEs

Most of England’s new housing is built by a small number of large firms. A report from the House of Lords Built Environment Committee in January 2022, Meeting housing demand, notes that small and medium sized enterprises (SMEs) developed 10% of new homes in 2020, down from 39% in 1988.

This figure is based on research by estate agents Savills, on behalf of LDS (a property development finance organisation).

Factors affecting SME housebuilding

SME housebuilders are currently facing a range of different challenges. The January 2022 report from the House of Lords Built Environment Committee, mentioned above, highlights the shortage of skilled workers as an important issue.

A report from the House Builders Federation says that in 2021, more than half of SME housebuilders reported that supply and cost of labour was a major barrier to housing delivery, up significantly on the previous year.

Government initiatives

Governments have provided support for SME housebuilders in several ways:

• Homes England, the Government’s housing delivery agency, offers the Levelling Up Home Building Fund. This provides development finance to SME housebuilders, as well as infrastructure funding to support developers, master developers and landowners.
• Homes England also provides Help to Build equity loans to help people build their own homes. This money does not go directly to housebuilders, and is not specifically for SMEs; however, because it is provided for one home at a time, it may be more attractive for customers to use smaller builders.
• On 29 January 2020, then- Secretary of State, Robert Jenrick, confirmed the British Business Bank’s ENABLE Build Programme would shortly begin guaranteeing new loans for local, independent construction businesses to deliver new homes.