Speaking to an audience of small housebuilders and other members of the Federation of Master Builders at the organisation’s winter reception at the House of Lords, Housing Minister Matthew Pennycook said the Government is “wholly committed to supporting SME housebuilders and increasing competition in the market,” because of an imbalance in favour of larger housebuilders, but defended the freezing of small site allocations at 10%.
Pennycook said that the recent changes to the National Planning Policy Framework would see “significantly more land released into the system and more permissions for SME housebuilders.” However he acknowledged that it “didn’t go as far as many of you would have liked in terms of the mandatory allocation of small sites ,” but he said that it was for “very good reasons…we were very worried about the impact that would have on strained local planning authorities, and that it might have had unintended consequences.”
Brian Berry, Chief Executive of the FMB, said that it was “disappointing that the current 10% allocation of small sites has been frozen, we know that availability of land is one of the biggest issues facing our members.”
Pennycook admitted the UK was “getting ever more reliant on a handful of volume builders,” and that the Government “was taking steps to address this such as some of the immediate barriers you face in terms of the release of land, capacity and capability support for planning departments, and finance.” He also confirmed that in 2025 the Department would be “consulting on national development management policies, which are one way we can look to support SME housebuilders on the release of small sites.” He added that they had extended the Home Building Fund “beyond April 2025,” including £700m of loans, and doubled the Enable Build Guarantee programme to £2bn.”
Pennycook added that “long term, we have to do more to address the broken housing system, diversify the market, and key to that is a long term housing strategy which we will set out in more detail next year.”
The FMB was launching a report ‘Supporting SME Housebuilders: Challenges and Opportunities’, which it commissioned from the London School of Economics, which “reveals that the housing market cannot be relied upon to readjust to deliver the type of SME housing output seen in the 1980s, when they accounted for 40% of all new homes,” said Berry. He added: “Government intervention is needed if we are to have a more diverse housing market; this includes the introduction of government-backed low-interest loans and more affordable funding options. The research also highlights the current skills crisis, calling for a greater focus on apprenticeships, training, and pathway for school leavers.”
while it was “pleasing that the new Labour Government had housing as one of its milestones,” including 370,000 homes per year, “this hasn’t been achieved since the late 1960s, and urgent action is needed, because we have a growing housing crisis, with 5 million fewer homes than we should have, and social housing fell to just 5,500 units built in 2022.” Crucially, he said, “the percentage of homes built by local housebuilders has declined to less than 10%, and without diversifying the housing market the Government won’t be able to achieve its target.”