SME built houses

The 11th Federation of Master Builders (FMB) Housebuilders Survey 2022 has found that custom and self build represents a significant stream of business for small- and medium-sized (SME) builders, with over 50% saying that self and custom build contracts were the most popular form of funding.

The survey of FMB members builds a picture of the barriers facing SME housebuilders, with land topping the list as the most significant limiter on growth. This is impacted by issues around viability of land, while planning remains the second biggest barrier to activity, followed by issues stemming from the skills shortage.

Good news comes in the fact that the materials crisis is easing, and that the link between custom and self build and the SME sector is becoming better recognised.

Constraints on supply

1 Land

62% of respondents cited the ‘lack of available and viable land’ as the most serious constraint on SME housebuilders ability to build more homes.

2 Planning

The second major barrier remains the planning system, with 60% of respondents identifying it as a problem. The lack of resourcing in planning departments consistently caused delays – which drove SME costs up.

3 Skills

47% of respondents stated that skills remains an issue. However, 1/4 said they were planning to grow their on-site workforce.

& Interest rates

While mortgage finance in general has improved, the interest charged on new loans was having a hampering effect.

Small sites

As the number one issue, over 4 in 5 respondents said that the number of small sites opportunities were decreasing, up to 82% as opposed to 71% in the 2021 survey. However this is tempered by the fact that 25% say the felt that local authorities were now taking small sites seriously, up from 11% the previous year.

SME housebuilders

The survey is an important indicator of the health of the SME housbuilder sector which has declined dramatically with time. SME house builders used to deliver 40% of new homes just over 30 years ago, but they now build around 10%. They are also responsible for building nearly all of the community led, custom and self build homes in the UK.

The FMB Housebuilders Survey has been running for 11 years and canvasses the opinions of FMB members, with 122 responses received, all of whom were builders in England. Of these, 47% build homes as contractors – and of this section 89% build self and custom build homes, designed to the specification of the owner.

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