Small house builders struggle to keep up with large corporations. » SMEInsider

Small house builders struggle to keep up with large corporations.

SME insider small building firms

Small British house builders are struggling to balance their books because banks’ are still reluctant to lend integral funds.

The crisis with small home builders has been ongoing since the 1970s. According to the Lyons review of UK housing, just 27 per cent of new homes today are built by small enterprises, compared to 58 per cent in 1977.

The National House Building Council (NHBC) argues that it is the unwillingness of large banks that is causing the decline of small home builders.

They want more flexible arrangements from banks and a personal touch: there is a lack of branch relationships; everything is centralised,” says Neil Jefferson, NHBC business development director.

The lack of profits coincides with the decrease of the existence of small firms. In October the NHBC announced a huge decline within its membership, recording a record low 3,000 members compared to a record high of 12,000 in the 1980’s.

A month ago The Home builders Federation (HBF), lobbied for Chancellor of the Exchequer George Osborne to use his budget to help small house builders and speed up the planning system. There was no mention of helping small house builders within his budget speech.

Although Osborne unveiled a ‘Help to Buy ISA’ to subsidise homebuyers’ deposits by up to £3,000, small building companies argue that he should have focused his efforts on tackling the obstacle-laden planning systems, as this restricts small builders’ ability to grow.

Although there has been reluctance to lend small building firms money, some banking firms have come to the aid of struggling SMEs. In October 2014, Lloyd’s publicized a £50m fund dedicated to assist small housing developers. Santander has launched a new building finance scheme this week, dedicating £100m to assisting small building firms.