The Home Builders Federation has released the results of a new survey, finding that the majority of small- and medium-sized enterprise (SME) housebuilders are unable to invest in new sites
The survey found that 70% of SME housebuilders are limited from investing in new sites by market conditions.
The SME Sentiment Survey is a quarterly survey meant to assess what barriers are in the way of housing delivery.
Market conditions have made for a cautious sector
Business confidence and investment decisions are limited or even outright prevented for many SMEs, due to issues with scheme viability, affordability, and buyer demand.
The government has made changes to the planning system and is encouraging all housebuilders to deliver more homes, but the market itself means that just 41% of SME housebuilders expect to increase the number of homes they start building in the next three months.
Furthermore, only 28% report having a positive market outlook, while 37% have a negative outlook for the near future. Specifically, 28% of builders that deliver up to 75 homes per year expect a decline in the next three months, and 18% are braced for a large decline.
The market conditions in question are affected by higher deposits, less accessible lending criteria, and consistently high interest rates, all of which have a negative effect on mortgage finances and make home ownership more difficult. This simply means that the housebuilders market remains weak.
HBF calls for measures to address this
Housebuilders are also faced with several taxes and costs set to increase, including a doubling of landfill tac rates, and a new homes levy, as well as increasing costs of 3-8% in the Future Homes Standard.
As such, the HBF are calling for a moratorium or postponement on new regulatory costs, taxes, and levies, as well as a review of the cost increases these businesses are facing, and determine ways in which costs might be lowered to boost housing delivery.
Neil Jefferson, chief executive at the Home Builders Federation, said: “Small and medium home builders play a vital role in a healthy housing market and in increasing housing supply. However, they are also the ones most impacted by the ongoing market conditions, lack of demand, and rising taxes and policy costs. While planning changes have been positive much more is needed to address the concerns of SMEs to enable them to play their part in delivering more homes.
“Policymakers must recognise the impact of rising taxes, levies and policy costs on the viability of new housing schemes. At the same time, the lack of support for first-time buyers continues to constrain demand. With strong public backing for a new equity loan scheme for first-time buyers, there is an opportunity to explore targeted measures that help buyers while supporting delivery.
“Without further action on both viability and affordability, the Government’s housing ambitions will become increasingly difficult to realise.”
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