SMEs report that planning remains their biggest obstacle
The latest State of Play report from the Home Builders Federation, Close Brothers Property Finance and Travis Perkins has revealed that the broken planning system continues to be the biggest barrier to building for small and medium-sized housebuilders.
The survey reports that 93% of SMEs state that delays in obtaining planning permission hamper their ability to grow, with 91% agreeing that local authority planning departments are suffering from lack of resource.
This is the fourth consecutive survey year that these items have been the top two barriers.
Almost half (46%) of SMEs also report an increase of more than 30% in the cost of obtaining planning permission, and only 13% believe that the government’s current approach to housing is helpful to first-time buyers. In 2022, this figure stood at 39%.
With all the economic uncertainty and higher mortgage rates plus a government that seems to be pursuing a more anti-development agenda, the situation for SMEs is bleaker than ever.
Stewart Baseley, Executive Chairman, Home Builders Federation
Meanwhile, the government’s reported plan to give British people priority access to social housing has drawn criticism from the sector.
On Friday, seventeen leading housing sector bodies penned an open letter to the Prime Minister and Secretary of State for Housing, voicing “acute concerns” about the rumoured ‘British homes for British workers’ policy.
The letter was authored by the Chartered Institute of Housing and co-signed by firms such as the National Housing Federation, Local Government Association, Crisis and Shelter.
We all deserve safe housing, regardless of where we are from.
Further rationing of an already scarce resource does not address the fundamental failures of the last 40 years – we have simply not built the homes the UK needs to ensure everybody has a safe and secure place to live.
Open Letter to the Prime Minister and Secretary of State for Housing
Housing starts fall following regulation rush
Figures from the Department for Levelling Up, Housing and Communities have revealed that a rush to start building work ahead of the updated Building Regulations in June resulted in a steep decline in new starts in the third quarter.
The number of new starts between July and September fell by -68% to 22,230, from 72,460 in Q2.
Meanwhile, Crest Nicholson reported a “disappointing” financial year, with adjusted pre-tax profit falling by -70% to £41.4m for the year ending 31 October 2023 (2022: £137.8m).
The trading update follows a third profit warning issued last week, with the developer completing 2,020 homes in the year; a reduction of -26% against the previous year.
The firm also announced that Peter Truscott will be stepping down as Chief Executive Officer, to be replaced by Martyn Clark, currently Chief Commercial Officer of Persimmon.
Materials manufacturer Forterra have also introduced another price rise this year, after revenue in 2023 fell -24% to £345m (2022: £455m).
Citing “falling sales volumes partially offset by pricing benefits”, the firm described forthcoming increases as “modest”.
Forterra mothballed two factories last year, and underwent a round of redundancies.
Number of construction firms on brink of collapse rises, as do charity calls
The number of construction firms on the brink of collapse jumped by a third at the end of last year.
The latest Begbies Traynor Red Flag Alert for Q4 2023 has revealed that 7,849 construction firms are in ‘critical’ financial distress; an increase of 33% on the previous quarter.
The construction industry ranks third in the list of firms experiencing ‘significant’ financial distress, with 77,077 businesses included in this category. Support Services tops the list, followed by Real Estate and Property.
Meanwhile, the Lighthouse Construction Charity saw an increase in calls of 30% in 2023, with 4,438 people seeking support through its 24/7 Construction Industry Helpline.
Charitable spend by the firm increased by 12% to £3,727,386, with on-site teams engaging with more than 25,000 site workers to raise awareness of mental health.
Anyone who needs to reach out can contact Lighthouse on 0345 6051956, or text HARDHAT to 85258.
Lords tells government to find prefab solutions overseas
A parliamentary committee has found that the government’s approach to modern methods of construction (MMC) is in disarray, proposing that it should look overseas for foreign companies to show the UK how it can be successful.
The report follows the collapse of Ilke Homes, House by Urban Splash, and the closure of Legal & General’s prefabricated housing factory.
The House of Lords Built Environment Committee carried out an inquiry into the future of MMC, and stated: “Millions of pounds of public money has been invested, but the money has not been backed by a coherent strategy and set of measurable objectives.”
There is evidence of real barriers to MMC, such as risk aversion on the part of warranty providers, insurance companies and insufficient clarity for building regulations. However, the government appears to have made limited effort to understand and address these challenges.
If the government wants the sector to be a success, it needs to take a step back, acquire a better understanding of how it works and the help that it needs, set achievable goals and develop a coherent strategy.
House of Lords Built Environment Committee Report
In other news…
The latest Builders Merchant Building Index has revealed that sales volumes were down -11.5% over the year to October 2023, with takings down -4.0% over the same period.
And, after delaying biodiversity net gain legislation twice, the government has now confirmed that the new rules will come into force on 12 Feburay.
The legislation requires all development projects with ten or more dwellings to generate a biodiversity increase of at least 10%.
Housing View 