SME housebuilders have historically been the backbone of the UK housing sector, delivering homes ranging from single units to large developments of up to 1,000 units per year.
Yet, their dominance in the market has waned over the years, calling for a critical reassessment of the systemic challenges they face.
Challenges for SME Housebuilders
SME housebuilders grapple with a myriad of hurdles. The increasing dominance of large-scale developers has made securing financing a daunting task.
The magnitude of this challenge led to MPs launching an inquiry to delve deeper.
To add fuel to the fire, building costs have skyrocketed by 23% compared to 2020 – the steepest rise in three decades.
Further exacerbating the situation, macroeconomic shocks induced by Brexit, the pandemic, supply chain disruptions, and soaring inflation have hit the sector hard.
This cocktail of crises has led to labour shortages, shipping delays, and increased costs, straining the already stretched budgets of SME housebuilders.
Disappointingly, the most recent Spring Statement offered little in terms of support for SME housebuilders.
Planning System Hurdles
Another formidable barrier for SME housebuilders is the sluggish planning system.
Planning applications can languish for years before reaching the committee stage.
Devolution of planning decisions to local governments often results in a tug of war between the national necessity for housing and local protectionist sentiments, hindering the process further.
The Emergence of Alternative Lending
Amidst this landscape of challenges, a beacon of hope emerges in the form of alternative lenders.
This new wave of financing has provided a lifeline for SME housebuilders, opening up fresh channels of capital.
To address the housing crisis, we must recognise the importance of a diverse development sector.
We must take decisive action to dismantle the barriers obstructing small and medium-sized developers accessing finance.
It’s only then we can rejuvenate the SME housebuilding sector, tipping the scales in favour of smaller players, and chart a course towards resolving the UK’s housing crisis.
Small businesses access unsecured, fast funding from Got Capital. As an alternative lender, Got Capital offers financing solutions specifically designed for and catered to the needs of SMEs.
