Crippling Planning Delays and Escalating Costs Affecting SME Housebuilders

A recent survey conducted by Close Brothers Property Finance, the Home Builders Federation (HBF), and Travis Perkins reveals the full extent of the challenges and problems currently facing SME housebuilders. Revealing the vast majority of Small and Medium Enterprise (SME) housebuilders in the UK are dissatisfied with the Government’s approach to housing. The survey, which is the most comprehensive of its kind, highlights the major obstacles facing SME developers. Including securing and processing planning permission, availability of land, and staffing shortages in Local Authorities. All of which are putting their businesses at risk.

– The survey found that 93% of SME developers believe that securing and processing planning permission is the biggest barrier to growth.

– While 52% of builders are facing an issue with the availability of land.

– Staffing shortages in Local Authorities were identified as the main cause of delays in the process by 76% of respondents.

– Rising material costs were a concern for 99% of the companies, and energy costs were a major issue for 88% of builders.

– More than two-thirds of SME developers are impacted by the “nutrients” issue, which is restricting development in over a quarter of England’s local authority areas.

– The report also revealed that 92% of SMEs are unhappy with the Government’s current approach to housing.

Peter Wade, Chairman of BLG comments “The survey findings fully support what BLG are seeing and hearing from their customers with major delays and frustrations caused by planning. In fact, we have subject to planning projects which were credit approved back in 2021. These planning challenges favour the larger v SME developers and need resolving to grow the home building sector.”

In its third edition, the SME State of Play Report has brought attention to the potential risks for businesses and hindered participation of SMEs. Due to the planning system’s increasing costs and delays. The timing of the report coincides with the industry’s current acute challenges. Including processing delays for planning applications, housing delivery moratoriums in a quarter of local authority and rising costs.

According to the survey, small builders are already anticipating the effects of the Government’s proposed Building Safety Levy. 40% of SME home builders foresee that the levy, which the Government consulted on between December and February, will impede future housing delivery by posing a barrier to all new homes.

Over recent decades, the dwindling number of SME builders are facing increasing challenges to overcome development constraints. 92% of SME builders expressed dissatisfaction with the government’s approach to planning or housing. Urging Ministers to take corrective measures to prevent a decline in supply levels.

Stewart Baseley, HBF executive chairman, commented: “SME builders in particular are struggling to overcome the growing constraints to housing delivery. The planning process is grinding to a halt and regulatory costs are rising, whilst the nutrient issue has put the brakes on sites across a quarter of the country. SME housebuilders are a major employer and have a key role to play if we are to meet our housing needs, but their numbers have plummeted in recent years. If we are to avoid losing even more businesses amidst a drop in supply, government must take action now to create an environment within which SME builders can operate.”

Rowland Thomas, managing director at Close Brothers Property Finance, adds: “The role of SMEs in the housebuilding industry has consistently been underestimated and often ignored when it comes to policy and planning. The reality, however, is that SMEs play a vitally important role in the creation of a healthy housing market and the consistent erosion of confidence in the government’s approach to planning, especially for SMEs and first-time buyers, gives great cause for concern. As we welcome in the sixth housing minister in just 12 months, we must look to the current planning consultation for solutions from Whitehall and we are grateful, alongside our partners, to have been contributing to that with the aim of finally finding a workable resolution.”

Kieran Griffin, managing director at Travis Perkins, stated: “The results of the survey have reinforced what we already knew in terms of the challenges we have faced over the last 12 months. There is not a construction business in the country which hasn’t faced significant challenges in terms of increased costs and supply chain issues. Collectively, as an industry, we have been navigating unchartered territory, with major global events significantly impacting prices and availability of a range of materials. We pride ourselves in forging strong relationships with our SME housebuilding clients, which are built over many years. While these have indeed been tested over this challenging period, these relationships are built on strong foundations, and we have continued to work closely with our clients to find solutions.”


"A challenging site like no other with every inch of the plot being built on and 12 apartments built-out through a driveway 2.5m wide off of a main high street with limited access rights, not to mention all the complexities associated with 13 Party Wall Agreements. Most lenders would not have had the vision for the scheme or the confidence in Spiller Builders to build out the scheme.  I just wanted to say how helpful the entire BLG team have been during the build. A very approachable and knowledgeable team, with a “can do” approach to lending. We will be looking to do more business with you for sure."

“We have used BLG for development finance for over 8 years. During that time we have found their knowledge and expertise in the property development industry to be second to none. Their loan process, pragmatic and flexible approach to lending and flexibility when required has supported our business needs throughout the period and provided us with support to deliver new homes in Bristol and the surrounding areas.”

“As property developers you never know the curve balls that you may get and a project that is great on paper may prove a bit more tricky.  This happened to us on a project that BLG have funded and throughout they have supported us.  Our business likes to be collaborative and when we hit those tough moments it really felt like we were working as a team with BLG.  If you have a decent project you can get it funded, but what you really need is a business that is there to support and advise you as well.  For us on this project it was BLG.”

“I approached BLG Development finance with an opportunity I had in Chesham, Buckinghamshire, to build 5 new build houses in 2021. My main contact was Anil Bains who is a Director covering Asset Management. Within very quick timescales, BLG provided me with indicative quotes in regards the finance levels they could offer me. Having considered those levels, I requested a valuation to be carried out which again was dealt with swiftly. We proceeded to completion. The build went very smoothly with monthly monitoring being carried out by BLG and monthly drawdown requests dealt with in a very timely manner. Due to a difficult time generally in the market in regards selling, I was in need of a six-month extension to the loan which again was appraised very quickly and granted. Having dealt with numerous funders over the last 20 years, I can only speak highly of my personal experience with BLG and would very confidently work with them again on any future projects. “

"From our side it has also been a pleasure working with BLG and the team there. We have found you easy to deal with, proactive in resolving any minor issues that have arisen through the project and shown great flexibility in working with us as a partner. We will certainly like to work with you on future partners."

“I really appreciate your hard work. We really like the way you communicate & I must say I haven't seen many people who are that approachable.”

“A very efficient processing team, dealing with the DD once deal credit approved, through to completion”

“Many thanks for your efforts on this one and getting it approved and sorted so swiftly, very much appreciated. I am sure I will be speaking to your over the coming months.”

“We had other funding options, but chose to use BLG again, as we work well with the team, who always provide very clear information and advice with a friendly approach throughout the funding process. Very efficient and always very helpful.”

“Many thanks Anil, it’s been a real pleasure working with BLG so far.  We’re lining up the next project too”

“We would recommend all staff we have dealt with at BLG, as we are very satisfied with the team and the initial offer/terms presented, then you and the funding team, through to the draw down team at valuation stage.”

“All documents are clear and the way you keep clients informed, all the way along the funding process, is refreshing for us”

“With regard to what should be improved at BLG, we work with many lenders in our business and we do not get the help and response we have had on the two projects with all at BLG on our funding for our developments.”

“We would particularly mention Dave Edwards and Tom Pitts as being central to having a smooth working relationship and being positive and helpful at all times. Their guidance in helping us navigate the project from inception to completion was invaluable. As was their patience, particularly at the beginning. We look forward to many future projects with the BLG team.”

“We would like to express our appreciation for your support on our development in Bristol. We were very pleased that, from the outset, you shared our vision of the project to convert a dated but classical building, that had outlived its usefulness as a school, into unique luxury apartments with views overlooking the city. We found our dealings practical and streamlined. Monthly payments were processed in an efficient and timely manner.”

“BLG are very good at communicating with clients and all documents are very clear and all at BLG are always happy to help.”

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