Small builders, big burdens.

How changes in planning have impacted on SME house builders.

Nick Verstage of 1st Business Finance – our Finance Ambassador for Exeter – shares an Insight published by United Trust Bank..

“This report has been commissioned by the Land, Planning and Development Federation (LPDF) and United Trust Bank (UTB) and prepared by Lichfields. It explores the impact of changes to the planning system since the 1990s on Small and Medium Sized (SME) housebuilders.

A consistent trend over the last thirty years has been the declining number of new homes being delivered by SME housebuilders. In 1988, SME housebuilders delivered 39% of all homes built in England, but this fell to just 10% of annual housing completions in 2020.

The potential for SMEs to deliver more homes is clear, but at a time when the ambition is to increase the number of homes built each year, Local Plans are allocating fewer small and medium sized sites for development, the lifeblood of SME housebuilder’s business models. This increases the reliance by SMEs on more risky sites outside of site allocations, sites that typically would benefit from the endorsement of an early stage of an outline planning permission.

This report focusses on this element of the increasingly laborious planning journey that face SMEs: the application for outline planning permission. We explore the evidence on whether changes in the planning system – making it more complex, more costly and more risky – have had any impact on this trend over the last thirty years. We test the hypothesis that obtaining an outline permission has come to involve the submission of larger amounts of supporting information, involves detailed pre-application discussions, creating significant upfront cost in return for an uncertain outcome, and disproportionately affects the activities of SME builders.

We find:
The time taken time taken to achieve an outline permission in 1990 was 13-14 weeks, but is now 52 weeks.
The cost of gathering the evidence required for outline permissions in 1990 (adjusted for inflation) was £28,000, but is now £125,000.
Despite the increasing delays in achieving permissions, planning fees have increased by 72% since 1990 (adjusted for inflation) and are set to increase a further 35%.
SME housebuilders are advised to provide on average 30 separate assessments for outline permissions in 2023.
Combined, this is having a material effect on SMEs ability to compete on sites and build more homes.”

Thanks, Nick, for sharing this! Some scary numbers, for sure.. You can discuss this, and any other burning topics, with our Ambassadors on 21 February!



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