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Scottish trade body calls for more support for SME builders

Words: Laura Edgar
Housing / iStock-175452390

Homes for Scotland has appealed for more help and support for small and medium-sized housebuilders if growth in the country is to continue, particularly regarding the planning system.

Small Scale Home Builders: Increasing Supply* outlines the barriers faced by the SME homebuilding sector.

Published after a year-long project, it considers the decline of small builders since the recession and makes recommendations for local and national agencies, as well as the industry itself, to help them grow and thrive again.

It found that the number of active SME homebuilding companies has decreased from 782 in 2007/2008 to 465 in 2017/18, which is a decline of 40 per cent.

If SME housebuilders can return to pre-recession levels of output, they could contribute about 2,000 additional homes a year to Scotland’s housing supply, particularly in areas where larger volume developers don’t currently build, according to the report.

Small Scale Home Builders: Increasing Supply also details that a lack of available and suitable housing sites, coupled with the constant struggle of securing implementable planning consents, through a planning system crippled with delays is causing issues. Evidence collected suggests that Scottish SME builders face confusion and inconsistency in the approach to developer contributions and information requirements for applications.

On planning, it advises the Scottish Government to produce new and specific guidance on planning for increased delivery of new homes by small-scale homebuilders. The Scottish Government should also establish a policy in the National Planning Framework 4, currently being developed, that directs planning authorities to “waive any requirements for developer contributions on small homebuilder sites of up to 12 homes”.

Local authorities should deliver an SME-focused development management approach that, among other things, provides nationally consistent and transparent guidelines on what is required to have an application registered and commit to determining application for small sites within the statutory eight-week period.

The report states that local development plans should provide viable local development opportunities targeted at small-scale housebuilders, with clearly worded policy stating where windfall development is supported.

Nicola Barclay, chief executive at HFS, said: “Despite the strong demand for housing that exists, smaller builders are delivering some 2,000 fewer homes per annum than before 2008. Encouraging more into the market is crucial, not just in terms of volume but particularly in relation to increasing diversity of product, creating local employment opportunities and sustaining more rural communities.

“Smaller companies generally have fewer resources and limited routes to finance which make the challenges of homebuilding all the more difficult to overcome.”

The report also noted that since 2008, housebuilders have been challenged by “increasing complexity and bureaucracy that particularly impacts interests of small businesses”. This has been exacerbated by a number of factors, including a shortage of development finance options available on fair and equitable terms and a lengthy and complex consents system that makes navigation and cash flow management a challenge.

Craig McLaren, director of RTPI Scotland, commented: “It is useful that Homes for Scotland has highlighted the potential of SME homebuilders to help deliver more, much needed housing. It is also helpful that the report points out the ongoing issue of funding and coordinating infrastructure to support new housing as this continues to be a key challenge for developers and local authorities alike.”

* The Homes for Scotland Small Scale Home Builders Working Group worked alongside the Federation of Master Builders (FMB) to produce the report, with input from the Scottish Government and Heads of Planning Scotland.

Small Scale Home Builders: Increasing Supply can be found on the Homes for Scotland website (pdf). 

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