Reversing the decline of small housebuilders

26
Barriers for SMEs
Land and planning
The availability of suitably sized sites and the
operation of the planning system was a regular
topic of discussion in interviews with small and
medium-sized companies. Indeed, whereas in
relation to other issues there are quite disparate
experiences, broadly corresponding to size of
enterprise, the difficulties companies face in
finding land, obtaining planning permission and
negotiating the planning process to the point
at which construction can commence, were
observed equally by very small companies and
those delivering hundreds of homes per year.
More providers, building homes on a wider array of
sites would also help to accelerate the speed of supply
increases, as well as the overall quantum, of housing. The
key to increased private-sector production is the number
of sales outlets, which in turn is dependent on: (a) the
number of planning permissions for single-outlet sites, and
(b) the number of permissions on large, multi-outlet sites.
Outlets are critical because:
Smaller sites, usually developed by small builders,
invariably consist of a single outlet but in terms of
‘delivery efficiency’ small sites are consistently efficient
across all strengths of local housing market. This is
shown best by new analysis by Savills and Hometrack,
using data from NHBC, which shows that the time taken
to complete a site of 10-49 units varies only by a few
months regardless of the strength of the local housing
market. Large sites on the other hand, can be built
out very quickly in the strongest market areas whereas
maintaining a good source of effective demand in the
weaker market areas is more difficult. This suggests that
the delivery efficiency of small sites means that more
sites in the range of between 10 and 50 units in size are
an important component of unlocking supply across the
entire country.
• There are sales and production limits to any single
outlet/site in a given period;
• Maximising sales (and therefore production) in a
market area requires the widest possible range of sites,
by size and location, so housebuilders can meet all
segments of market demand by offering the widest
possible variety of products, locations, brands, price
points, scheme sizes, etc.