Reversing the decline of small housebuilders

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Historical context: Charting the
diminution of SME housebuilders (cont...)
More recently, the Government, recognising the benefits
of a more diverse, healthier sector with a greater number
of companies providing homes, has sought to use policy to
limit the cost of regulation for developers of smaller sites.
Exemptions for small sites (defined usually as either ‘fewer
than 10 units’ or ’10 units or fewer’) have been introduced for
Section 106 affordable housing, Community Infrastructure
Levy (CIL) payments and the forthcoming Starter Homes
requirement; and fast-tracked planning for converting certain
use classes into residential has created new opportunities for
SMEs. While these measures have proven helpful, they are far
outweighed by the proliferation of regulation and the raft of
unfavourable planning policies and practices introduced over
the past three decades.
The Home Building Fund (HB Fund) promises to be more
flexible and involve a longer-term relationship between
the Agency and the developer. It is too soon to judge how
successful the HB Fund will be and early feedback from
companies that have initiated contact has been mixed, but
in any case, it is unlikely to be of the scale to completely
transform the environment for SMEs and, indeed, is broadly
unavailable to new entrants. With some improvement
to the indicative timescales, the fund could, however,
prove successful in supporting established small firms
and ambitious medium-sized companies to expand more
quickly than would otherwise be possible.
A succession of initiatives have been announced to help
SME builders secure access to development finance,
which has been in short supply since 2008. Until the Home
Building Fund was unveiled by Secretary of State, Sajid
Javid in October 2016, the most high profile package
was the Builders Finance Fund which launched in April
2014. Initially only available on sites of at least 15 units,
the scheme had limited success. In addition to being
prescriptive, financial assistance was generally only available
for developers on sites with detailed planning permission.
Developers also reported that the process used by the
administrator, the Homes and Communities Agency,
remained onerous and terms were not hugely attractive.