Number of small firms in housebuilding has halved

The increased costs and delays in the planning system is now at the point where it is putting small construction companies off the housebuilding sector, according to new report from the NHBC Foundation.

Worryingly though for the construction industry, the number of small businesses operating in housebuilding continues to fall. The report states that only 12% of the market was made up of small firms in 2015, in comparison to 28% in 2008.

The research ‘Small house builders and developers: current challenges to growth’, examined the experiences of 500 small companies who would build on average fewer than ten homes in a year.

NHBC head of research and innovation Neil Smith said: “While the planning process is recognised as a necessary control, small house builders and developers continue to express considerable frustration with it. The increasing complexity, time taken to achieve a decision, and the unpredictability and inconsistency within the planning process are slowing the delivery of new homes and, in some cases, causing companies to leave this market.

“Greater certainty and more standardised approaches, clarity concerning the fees and tariffs, coupled with a more responsive service from planning departments would increase predictability and significantly help to speed up the process, thereby increasing the number of homes built.”

The results revealed that small builders felt the planning process was “deeply frustrating”, with a third suffering delays of more than a year for local authority planning approval, while almost 80% had seen substantial rises in planning-related fees in the last two years.

Another major obstacle was a lack of land available to small companies.

Concerns were also raised about the current skills shortage within the industry, coupled with a apathy from young people about taking up a career in construction.

In its housing white paper earlier in the year, the government pledged to make housebuilding process easier and more accessible for small building companies.

The overall mood of respondents, however, was upbeat with two thirds predicting a rise in the number of homes they would build over the next two years.

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