Report says small firms being hampered over number of units they can put up

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A cross-party group of MPs is urging the government to help smaller firms build more homes in the coming years.

The inquiry into the support for small housebuilders, which was supported by the Federation of Small Businesses (FSB), wants to redress the number of homes built by small housebuilders, which has plummeted to just 2,500 today from 12,000 in 1998.

It said smaller firms face a number of barriers including access to finance and the amount they have to shell out on developer contributions such as the Community Infrastructure Levy.

Tory MP Robert Courts, chair of the all-party parliamentary group, said: “Government action has started to address some of the needs of small builders but we must leave no stone unturned to truly unlock the housing market.

“A new, dedicated strategy for small housebuilders would be an important step in achieving this. This needs to centre on a positive package of measures that removes some the biggest barriers for small builders.”

Labour’s Catherine West, who is vice chair of the inquiry, said the current state of the UK housing market meant there was huge potential for small builders to make a vital contribution to the housing crisis.

She said: “Our report sets out a series of proposals that will enable small builders to scale up, grow and build more which will help relieve the housing shortage.

“The simple truth is that the UK cannot expect to build the homes we so desperately need unless smaller builders are backed. Giving small builders the keys they need could result in tens of thousands of urgently needed homes being built up and down the UK.

“This will help create jobs, stimulate economic growth and provide the homes the UK need.”

Mike Cherry, national chairman at the FSB, said: “It is vital that the government does not turn a blind eye to the findings of this report and commits to creating a dedicated strategy aimed at giving small homebuilders the finance, skills and support they need to help fix the broken housing market.”

The report’s findings

  1. Limited access to finance: MPs are calling for a government backed guarantee on loans to small housebuilders, who are more reliant on financing than bigger builders with large reserves of cash. 
  2. Action against businesses that pay their suppliers late: The report asks for a strengthened prompt payment code with a new “three strikes and you’re out” rule targeting big businesses who repeatedly pay late.
  3. More help to increase apprenticeships in the building trade: Large businesses paying the new apprentice levy must prioritise transferring their levy to small, rather than large, businesses, helping to increase apprenticeship opportunities in the building trade.
  4. Remove barriers to building on small sites: Government must use the revised NPPF to streamline the planning process for smaller firms.