Finance, planning and red tape were identified as barriers preventing smaller firms from playing a bigger part in tackling the housing crisis.

HBF found that over the past 25 years the number of SME builders reduced by around 80%, but if numbers rose to just 2007 levels, it could produce 25,000 more homes a year.

The report’s foreword was written by Redrow founder Steve Morgan, who said growing his fledgling business into a national, publicly listed builder would be inconceivable today.

Despite an increase in lending to SME builders, the report found that the situation has improved little since the recovery of the 2008 financial crash.

The report has suggested a number of steps the government can take to improve housebuilding, including:

• tackling specific planning problems that disproportionately affect the business environment for SMEs, including the lack of smaller sites and the impact of pre-commencement conditions
• the creation of a new Help to Build scheme to help extend sustainable lending to smaller companies
• lift barriers for builders to access tax incentives and other support enjoyed by SMEs in other sectors
• provide technical and planning advice services for fledgling businesses
• seize the opportunity of Brexit to reform EU regulation reducing the risk and complexity associated with building new homes.

Stewart Baseley, executive chairman of the Home Builders Federation, said while housebuilding had increased significantly, the vast majority of the increases have come from larger companies.

“The number of smaller builders has collapsed over recent decades with few new entrants to the market able to grow to any size.

“If government wants to see continued increases in supply, it is imperative it enables SME builders to play their part.

“Removing the barriers for SME builders could result in tens of thousands of desperately needed additional homes being built and boost economies up and down the country.”