Brian Berry, CEO of the Federation of Master Builders (FMB), looks at some of the major issues the industry is already confronting and tackling in 2024.
As we start to move through 2024, we can already start to see some of the main hurdles that the industry will have to grapple with. We’ve seen that interest rates may not be on the decline as early as we had hoped, with inflation still rearing its head. Therefore, the market remains uncertain, with the green shoots of recovery held below the surface for now.
Towards the end of last year, the FMB launched its annual House Builders’ Survey, which takes a comprehensive look at the issues small, local house builders face. In this article I’ll look through some of the main areas which are holding back housing delivery.
PLANNING – THE PERENNIAL ISSUE
When we asked our members to list the biggest barriers facing the delivery of new homes for them, the top issue was planning. This will come as little surprise to those in the wider construction industry, as it holds back far more than just new housing.
While there are technical changes to the system that need addressing, a lot of the remedies are simple fixes. Communication with local authorities is rated very poorly by small builders, very often we hear that a 30-minute conversation would have saved weeks, if not months of planning delays. Key to solving the issue of poor communication will be to resolve the lack of resources within these departments. Planning departments are stretched and there are too few planning officers joining the industry, and those that are can be lured away by private sector wages.
Then there is the cost of the system, which for smaller developers is a key burden owing to their reliance on a steady cash flow. Delays, unsurprisingly, add to cost, which given the poor state of communication are all too commonplace. Our members are also clear that complexity is a major cause of extra cost, often with expensive consultants required to solve a multitude of issues.
And last but not least, information requirements requested by planning teams; vast quantities of paperwork, that we’re told are often unnecessary, which really adds to a small business’ administrative burdens.
ECONOMIC WOES HARMING DELIVERY
In the last few years, the wider economy has been hurting delivery from smaller house builders. This was particularly clear in the latter stages of last year, with the lack of mortgage products stifling the delivery of new homes from SME house builders. It became such an issue that it was the second most significant barrier holding back new homes.
This isn’t surprising given that a number of SMEs work as contractors for house building and will therefore be heavily reliant on consumer demand to generate work and their ability to pay for housing. This issue seems to be a snapshot of the economic problems of the last year or so, the origin of which can be pinpointed to the now infamous budget under the former Prime Minister Liz Truss.
SMALL SITES – WHERE ARE THEY?
A large group of our members reported that the number of small sites is decreasing and to make matters worse, many reported that obtaining planning permission for small sites is not getting any easier. Those reporting that small sites are being taken seriously by local authorities was also very low.
The data we’ve compiled doesn’t paint a positive picture for small, local house builders to obtain small sites particularly as they face two sets of hurdles, first, to find the land they need and then, obtaining the planning permission needed for it. While the National Planning Policy Framework (NPPF) has been updated, once again, to strengthen the provisions on small sites,
unless it’s truly enforced, I fear not much will change.
THE ROAD AHEAD
So, plenty of hurdles, but what about solutions? Quite rightly, housing has catapulted up the political agenda. With the General Election on the horizon, let’s see if the politicians take the bull by the horns and start articulating sensible answers to the nation’s housing crisis. I know the industry is ready and willing to help.