1. SME house builders: boosting diversity in housing supply
Andrew Dixon
Head of Policy, FMB

2. Federation of Master Builders
Established 1941
UK’s largest employers’ body for SME construction firms
UK wide coverage
Independent inspections for all members
Warranties
Customer complaints service
Herts Housing

3. Agenda ...... The position of SME house builders… Barriers to growth…
Current policy…
LAs and SMEs working in partnership…
Herts Housing

4. SME house builders Shrinking supply… Decline in SME housing building
1988: 66%
2016: 23%
Firms building <100 fell by half since 2008
Huge loss of capacity and reduced competition
Herts Housing

5. SME house builders More than just supply…. Local growth and local jobs
Skilled employment - SMEs employ 2/3 construction apprentices
Small and brownfield sites
Quality
Diversity
Herts Housing

6. SME house builders Three key barriers ……….
1. Availability of suitable, viable smaller sites
2. Availability of finance
3. Cost, complexity and delay in navigating planning
Herts Housing

7. SMEs: barriers to growth
Availability of small sites
67% view land availability as major constraint
Most pronounced for sites smaller than 10 units
Scarcity about size, location, planning & price
Complex set of causes….
Treatment of smaller sites within plan-making process
Disproportionate resistance to infill development
Price expectations of landowners
Herts Housing

8. SMEs: barriers to growth
2. Access to Finance
FMB House Builders’ Survey 2016 – 50% cite access to finance as major constraint
Banks reluctant to lend for small developments
Lending terms unfavourable
Significant improvement in last two years - mainly from alternative lenders
Herts Housing

9. SMEs: barriers to growth
3. Cost and delay in planning application process
Significant investment of resources, limited certainty of outcome
Pre and post permission delays hit cashflow and increase cost of financing
FMB House Builders’ Survey 2016
Biggest cause of extra cost: info requirements
Biggest cause of delay: under-resourced planners
Herts Housing

10. Current policy environment
Housing White Paper:
Strong focus on small sites and speed of delivery
10% of allocations to be ½ hectare or less
‘Great weight’ given to small sites
Opportunities for SMEs on larger
Housing Delivery Test
Movement on planning resources
SMEs and Housing Supply
Herts Housing

11. Current policy environment
Other key initiatives:
£3 billion Home Building Fund
Permission in Principle
Brownfield Register
10 unit threshold for affordable housing
SMEs and Housing Supply
Herts Housing

12. FMB & LGiU small sites research
Context:
67% SME house builders say lack of small sites is a major barrier to building more homes
Government keen to get more small sites going
Interest from LAs in working with SME builders
Aim: improved focus on smaller sites and the potential for LAs to work with SMEs.

13. FMB & LGiU small sites research
FMB and Local Government Information Unit (LGiU)
Survey of local authorities and FMB members
Roundtable workshops with builders and LAs
Interviews with planning officers
Case studies of good practice

14. Small sites: key findings
70% of councils deliver fewer than 40% of homes on sites smaller than 1.5 hectares
79% SME builders think the planning application process for small sites ‘too heavy handed’
64% builders and 45% of LAs see under resourcing of planning depts. as barrier to small sites
55% of LA respondents said quality of planning applications for small sites often poor
80% SME builders said LAs in their area do not proactively communicate or engage with them

15. Small sites: key issues
Allocations in local plans: builders want councils to identify and allocate more small sites; planners see this as resource-intensive and time-consuming
Small sites more difficult: LAs acknowledge privately small sites can be more difficult (politically and administratively)
Planning bureaucracy: builders see planning for small sites as too bureaucratic; only 14% of planners agree
Impact of under-resourcing: both sides agree; impacts on application process and ability to be proactive
Engagement: 79% of LAs said they actively engage SMEs in plan-making process; only 4% of SMEs think so

16. Small sites: recommendations
Councils should improve their strategic engagement with SME builders - developer forums, online portals, workshops
Councils should be required to include strategic consideration of small sites within local plans
Councils should seek to reduce complexity and uncertainty in the planning application process
Councils should use their land assets more creatively and look to broker between landowners and SME builders where possible
Herts Housing

17. Small sites: recommendations
Government should give councils power to set and vary planning fees locally, if revenue can be ring-fenced and good service guaranteed.
The industry, led by the FMB, should produce ‘best practice’ guidance for small builders on planning for small sites.
Herts Housing

18. Good practice: case studies
Birmingham City Council
Large number of small garage sites
Required new partnerships
On-line planning portal
Dynamic purchasing system
De-risking sites

19. Good practice: case studies
Leeds Council
Monitoring of SHLAA
Analysis of sites not coming forward
Interventions can include:
Signposting to funding
Brokering relations between landowners and developers
Assistance with planning

20. Good practice: case studies
NE Lincolnshire Council
Local Development Forum
Barnet Council
Specialised pre-application service providing premium fast track planning support for a fee, with dedicated lead officer.

21. Local authorities and SMEs
General principles for a partnership approach:
Ongoing engagement
Strategic view of small sites
Improved mutual understanding
More upfront clarity in planning
Rationalising processes
Flexible, proactive approach to small sites

22. Questions?