Small builders are key to solving housing crisis say cross-party MPs

A cross-party group of MPs has urged the government to introduce a new ‘Dedicated Strategy for Small Housebuilders’ to reverse the decline in the number of new homes built by small builders.

According to the Home Builders Federation, in 1998 12,000 small builders were responsible for 40% of new build homes compared to 2,500 building only 12% today.

Describing the new proposals, the MPs leading the report said: “We have many legitimate disagreements with each other on many aspects of housing policy, but on this we are agreed: we cannot solve the housing shortage without smaller builders.”

‘An Inquiry into Support for Small Housebuilders’, supported by the Federation of Small Businesses (FSB), calls for a ‘Dedicated Strategy for Small Housebuilders’ which must address the key challenges holding housebuilders back, including:

1. Limited access to finance: MPs are calling for a government-backed guarantee on loans to small housebuilders, who are more reliant on financing than bigger builders with large reserves of cash.
2. Action against businesses that pay their suppliers late: The report asks for a strengthened prompt payment code with a new “three strikes and you’re out” rule targeting big businesses who repeatedly pay late.
3. More help to increase apprenticeships in the building trade: Large businesses paying the new apprentice levy must prioritise transferring their levy to small, rather than large, businesses, helping to increase apprenticeship opportunities in the building trade.
4. Remove barriers to building on small sites: Government must use the revised National Planning Policy Framework to streamline the planning process for smaller firms.

Robert Courts MP, chair of the All-Party Parliamentary Group (APPG), said: “Government action has started to address some of the needs of small builders but we must leave no stone unturned to truly unlock the housing market.

“A new, dedicated strategy for small housebuilders would be an important step in achieving this. This needs to centre on a positive package of measures that removes some the biggest barriers for small builders including the inability to access finance and reducing the cost of developer contributions like the Community Infrastructure Levy.”

Catherine West MP, vice chair of the inquiry, said: “The current state of the UK housing market leaves no doubt that there is huge potential for small builders to make a vital contribution to building the homes we need.

“Our report sets out a series of proposals that will enable small builders to scale up, grow and build more which will help relieve the housing shortage.