The latest State of Play report 2024/25 shows that 97% of small- and medium-sized enterprise (SME) housebuilders say that current tax and regulatory environments are holding back business growth
Therefore, if the government were to introduce effective SME housebuilder support, delivery could be boosted by an average of 56%.
The report, produced by Close Brothers Property Finance, the Home Builders Federation, and Travis Perkins, explores the myriad challenges facing SME housebuilders.
Early policy changes were effective but more is needed
Currently, 9/10 SMEs are less optimistic about the future than they were before the general election, in spite of early policy changes the government made.
Furthermore, the report finds:
- 97% say business taxation and the regulatory environment are barriers to the growth of their business in the next 12 months.
- Financial pressures were a big barrier, with 64% citing cumulative viability pressures and 58% citing difficulties obtaining offers for S106 Affordable Homes.
- Regulatory and political challenges remain significant barriers; 66% report local or political opposition, 55% Biodiversity Net Gain and 54% the Building Safety Levy.
- 94% of SME builders cite securing planning permission or discharging conditions as a major issue.
- 89% of SME builders view Local Authority capacity as a major constraint
- Land and infrastructure issues also continue to limit delivery, with 54% citing land prices, 39% citing land availability, and 49% the costs/timescales for utilities provision.
- Construction and supply challenges are notable but viewed to have less impact with 43% citing labour/supply costs and 41% cost of materials as major barriers to growth. While 67% of respondents said the supply chain and materials availability were a barrier to growth, only 10% said it was a major barrier.
Government policies can support SMEs
These same SMEs feel that if the government pivots on policy to support SMEs enough, they can increase their delivery of housing by an extra 35,000 homes per year, and end up delivering a third of the government’s 300,000 new homes per year target.
Other issues faced by SMEs are detailed in the report, including difficulty in securing S106 bids from registered providers and financial barriers.
The report also lists some examples of potential policy changes to aid SMEs, including reducing the cost of the planning process, simplifying the planning process, increasing the availability of small sites in local plans, and revising CIL and S106 obligations, along with support for first-time buyers.
Emma Ramell, director of external affairs at the Home Builders Federation, wrote for PBC Today in October, detailing how support for first-time buyers would be crucial to the housebuilding industry and economy.
The State of Play report 2024/25 can be read in full here.
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