Over 100 intermediaries took part in United Trust Bank’s sentiment survey in August, with 74% expecting the industry to fall short of the target.
When brokers were asked to indicate what they believed to be the foremost barrier to business for SME housebuilders, the most common answer was developers’ ability to find good land and redevelopment opportunities, closely followed by problems with the planning process.
Key barriers to business for SME housebuilders:
“It’s quite worrying to see that according to the brokers who work closest to developers, the greatest obstacles to new business are the fundamental requirements of building new houses and apartments: somewhere to build homes and the permission from the planners to do so,” said Noel Meredith, executive director of United Trust Bank (pictured above).
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“A short supply of suitable green and brownfield sites will not only hamper the industry’s ability to deliver the government’s one million new homes target by 2020, but it will also add to house price inflation with approved development sites fetching increasingly inflated prices, which will inevitably be reflected in higher asking prices for the finished products or reduced profit margins for developers.”
Noel continued: “There’s plenty of land in the UK suitable for development, but the pressures from multiple stakeholders – such as local residents fearing change and conservationists concerned with the environmental impact – often mean that viable opportunities are abandoned early on.
“It remains to be seen whether the government’s commitment to freeing up development land will make any material difference to what is currently a dysfunctional system.
“Figures from organisations such as the NHBC [National House Building Council] regarding new home completions, seem to indicate that there is a slim chance of the one million target being met by the end of 2020.
“However, with the population continuing to grow, we will need to keep building new homes at an increased rate for some years to come in order to meet the nation’s future housing needs.”