Access to mortgages holding back SME house builders, warns Federation of Master Builders

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  Posted by: electime      28th November 2022

Access to mortgages is holding back small house builders from building, reveals the latest FMB House Builders’ Survey, which is launched tomorrow in Parliament.

Restricted mortgage access, an issue that is rarely cited as a major barrier to development, has entered the list of top four barriers stopping development. Worryingly local house builders indicated this will only get worse over the next three years. The other main barriers include lack of available and viable land; the planning system; and lack of skilled labour.

The FMB’s 2022 House Builders’ Survey – the only survey of its kind to track the experience of small and medium-sized (SME) house builders in England – shows that in 2022:

  • The ‘lack of available and viable land’ is the most cited constraint (62% of respondents) on SME house builders’ ability to build more homes.
  • This is closely followed by ‘the planning system’ at 60%.
  • Shortage of skilled workers affects 47% – the third highest rated issue.
  • Restricted mortgage availability is cited as the fourth biggest issue (by 38% of responders) with 48% thinking this will get worse over the next three years.

The annual survey, which has been running for over a decade also shows buyer demand has dropped this year and predicted to get worse next year.

With just 10% of all new housing delivered by small builders, down from 40%, 30 years ago, more needs to done to enable small, local house builders to build homes for their communities, which will help diversify the housing market and give greater consumer choice..

The FMB House Builders’ Survey 2022’s key lessons for the Government, local government, and Homes England to support small builders, are:

  • Ensure that SME house builders are better engaged with throughout the planning process. Priority should be given to businesses with less capacity to navigate the planning system.
  • Identification of small sites in local authorities’ Local Plans and greater enforcement for local authorities to produce Local Plans to help SME house builders find the land they need.
  • Improve skills training to develop more home-grown talent, but also allow targeted immigration for the housing sector.

Brian Berry, Chief Executive of the FMB said: “This year’s FMB House Builders’ Survey highlights the persistent barriers holding back small, local house builders. Delays in the planning system and a lack of available and viable land are stopping the industry building the homes that are needed. The lack of mortgage availability reveals the damage that the current economic turbulence has created”

Berry continued “A lack of skilled labour is another major barrier holding back the potential of SME house builders. This will come as little surprise to many. A lack of skilled workers grips the industry and must be tackled head on. The Government must look to develop home grown talent, but targeted immigration has to be an option on the table to support the industry.”

Berry concluded: “The Government can achieve its ambitions for growth and levelling up by supporting the nation’s SME house builders. Who better to invest in, than local house builders, who act as the engines of growth in their communities, employing local workers, training local school leavers, and delivering quality homes.”