On a crisp autumn morning in London, I had the privilege of engaging in a conversation with Sarah Bennett, a senior project manager at Pocket Living. Our dialogue revolved around the recent report published by Pocket Living, which fervently advocates for the creation of Homes England ‘SME managers’ as part of a comprehensive 10-point plan aimed at revitalising the beleaguered smaller housebuilder sector.
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Sarah, an eloquent and poised professional, was keen to delve into the nuances of the report and the indispensable role SMEs play within the housing market. “The predicament for SME housebuilders is becoming increasingly severe,” she commenced. “From a robust figure of over 12,000 SME homebuilders in the late 1980s, we have witnessed a precipitous decline to fewer than 2,500 today. This report’s timing is nothing short of critical.”
The report, entitled ‘Get SMEs Building Again,’ delineates a robust plan that includes establishing up to 25 Homes England SME manager positions. These managers would provide dedicated support to SMEs, serving as a singular point of contact to streamline and clarify the funding process. “Envision having a knowledgeable guide navigating you through the complex maze of funding and regulatory requirements,” Sarah elucidated. “These SME managers would offer precisely that—a vital lifeline for smaller builders.”
Sarah expounded on the myriad challenges confronting SMEs, highlighting that these smaller builders currently account for a mere 10% of the UK’s housing output—a stark contrast to the 1960s and 70s when they contributed nearly 50% of new homes. “The decline is profoundly alarming,” she remarked. “In London alone, the number of SME housebuilders has dwindled by 66% over the past two decades.”
The report further advocates for the inclusion of a metric in Homes England’s annual performance review, mandating that at least 15% of housing delivery originate from SMEs. “Such a metric would ensure that SMEs are not marginalised,” Sarah stressed. “It would engender a more balanced and competitive housing market.”
An additional and noteworthy recommendation in the report is the introduction of a quota for local SMEs within local plans. Sarah elucidated, “This measure would ensure that SMEs continue to be integral to the housing market, thereby fostering diversity and innovation.”
Sarah’s fervour for the subject was palpable as she discussed the financial obstacles faced by SMEs. “To deliver an additional 50,000 brownfield homes annually, we estimate that over £60bn in capital is required. Reforming tax policies to permit full expensing of build costs at the time of expenditure, rather than upon the sale of homes, could substantially alleviate the financial strain on SMEs.”
The report also proposes adopting a New Zealand-style approach to planning, which involves referring only the largest planning applications and depoliticising the process by incorporating experts on the panel. “This would streamline the process and mitigate the bureaucratic red tape that frequently hinders smaller builders,” Sarah observed.
As our conversation neared its end, Sarah reflected on the broader ramifications of the report. “Without a thriving SME housebuilding sector, the government’s target of 1.5 million homes by the end of this term remains unattainable. The recommendations within this report are crafted to be cost-neutral for the Treasury, rendering them a feasible and pragmatic solution.”
Sarah’s insights were both enlightening and persuasive, vividly illustrating the challenges and prospective opportunities facing SME housebuilders. The report by Pocket Living, endorsed by prominent developers and trade bodies alike, stands as a clarion call for governmental action. As Sarah succinctly articulated, “The government must take these recommendations seriously and act promptly before it is too late.”
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