We must re-empower small and medium-sized housebuilders

Small and medium-sized house builders have historically played a critical role in the construction of new housing in England. In the 1930s small builders dominated the market. As recently as 1995, small- and medium-sized companies were responsible for delivering around 40 per cent of new housing stock.

In the last few decades, however, the market has come to be dominated by volume house builders. Just eight companies were responsible for half the houses built last year. Smaller firms accounted for a quarter of the output.

The dominance of volume house builders has caused concerns for location and housing quality. The larger companies are clear in their desire to keep costs down and to bank land to increase the value of their holdings. They are also clear in their desire to construct new homes eliciting maximum profit - an important aspect for a successful business, but not necessarily for the delivery of quality houses in the most appropriate locations. The considerable cost of redeveloping brownfield land encourages these house builders to develop greenfield and Green Belt land instead.

To encourage smaller builders to provide more housing, Mr Lewis needs to look at providing them with better access to land and better access to finance

Recently appointed as the new housing minister, Brandon Lewis must contend with the other core concern with volume house builder dominance: supply. The need for new housing is often quoted as standing at 200,000 per year, but at current rates and with an over-reliance on the private sector England is not going to meet that target. As such, Mr Lewis must encourage and enable small- and medium-sized builders to play an increased role in the house building sector.

Smaller builders do not just help on supply. As they are more attracted to the returns smaller sites can offer they have the potential to increase development of brownfield sites under two hectares.

They are also able to build housing to considerably higher standards of energy efficiency, and which is more suited to unique, local design characteristics. The Old Apple Store development in Stawell, Somerset, is a great example of this.

To encourage smaller builders to provide more housing, Mr Lewis needs to look at providing them with better access to land and better access to finance.

In the first of a new series of research papers on the housing crisis from the Campaign to Protect Rural England (CPRE), I suggest that there are four ways to increase the role of small- and medium-sized builders in the delivery of housing.

First, there should be an obligatory identification and allocation of smaller brownfield land for development within a wider ‘brownfield first’ policy. This would encourage the development of smaller brownfield plots, and save time on the complex and time-consuming plans required for larger house building projects often delivered on Green Belt and greenfield land which should be protected. Chancellor George Osborne’s recent proposals for councils to identify and pre-approve brownfield sites for housing development could be a step in the right direction if smaller brownfield sites are included in those measures.

Second, we should try to improve access to finance for smaller builders. Small builders are currently hindered by the reluctance of lenders to provide finance to smaller companies in the volatile housing market. As a result government must do more than provide funds for development of stalled sites. One idea is establishing a British investment bank to mobilise private investment; another is to provide government guarantees on money loaned to smaller builders.

Third, we need to decrease the cost of obtaining planning permission for residential developments of under ten units on brownfield sites. As smaller builders currently struggle to afford the significant costs associated with permission, local authorities could consider a fast-track mechanism for smaller brownfield developments where there is less required information, and consider the reduction or exemption of the community infrastructure levy where the proposed development is under ten units on brownfield land.

Finally, the implementation of intelligent design codes could alleviate the pressures associated with stakeholders exerting control over certain aspects of a development. Such design codes could be drawn up collaboratively between the local planning authority, developers and the local community to facilitate the planning process and ensure appropriate and sustainable projects.

For too long there has been a lack of diversity in the UK house building market. Supply is low, standards are slipping and brownfield land stands wasted and undeveloped. Smaller builders offer the opportunity to reinvigorate the industry. Let’s encourage them - and enable them - to do so.

Luke Burroughs is a policy and research adviser at the Campaign to Protect Rural England. Luke is currently writing a series of papers called Housing Foresight to identify innovative solutions to the housing crisis. Luke can be contacted on 020 7981 2819, or at lukeb@cpre.org.uk