According to the Federation of Master Builders, getting more small builders back into the market and focusing attention on the potential of smaller sites is crucial to improving the speed of new home construction.
In response to the Prime Minister’s speech, Building a Britain fit for future, Brian Berry Chief Executive of the FMB, said: “Small sites tend to deliver more quickly and smaller builders, for whom short term financing is more of a concern, have every incentive to build and sell quickly. More opportunities for these smaller developments will diversify the market, boost capacity and speed up delivery.
The Government has clearly recognised this, and is today setting out a raft of changes to national planning policy that will encourage more small sites to come forward. We particularly welcome the move to ensure that at least 20% of the sites identified for housing in local authority’s plans are smaller sites.”
Berry continued: “However, we also need to be aware that the pace of building homes cannot be simply dictated. Those whose business is building houses have very few incentives to just sit on land. SME builders in particular have every incentive to build and sell as quickly as they can, so that they can recoup their investment and move on to the next project – nothing else would make financial sense. But developments can be stalled and slowed down for perfectly good reasons – from the financing difficulties which can often affect smaller builders, to downturns in market conditions. Building a house is a very significant investment, and house builders who build without being sure they can sell, don’t stay in business very long.”
Berry concluded: “There is reason to push back against developers who have a particularly poor track record of delivery, and those who seek planning permissions purely for speculative purposes, but the Government needs to make sure that rhetoric doesn’t get ahead of reality. It should recognise that attempts to force building at a rate which makes poor commercial sense could end up slowing down delivery. This could end up discouraging rather than incentivising the SME builders and new market entrants we need to diversify the market.”