Supply chain · 28 March 2018

Late payment crackdown could help smaller builders solve the housing crisis

Housing crisis
Smaller building firms are more reliant on financing than bigger builders with large cash reserves

The government is being urged to solve the UK’s housing crisis by ramping up support for small builders, including cracking down on late payers and easing access to finance.

A cross-party group of MPs have penned a report calling on the government to introduce a new “Dedicated Strategy for Small Housebuilders” to reverse a decline in the number of new homes built by small builders.

This has dived from 12,000 homes in 1998 to just 2,500 today.

The MPs behind the “Inquiry into Support for Small Housebuilders’, supported by the Federation of Small Businesses (FSB), wants the government to address the key challenges “holding housebuilders back”.

This includes calling for a government backed guarantee on loans to small housebuilders, who are more reliant on financing than bigger builders with large reserves of cash. MPs also ask for a strengthened prompt payment code with a new “three strikes and you’re out” rule targeting big businesses who repeatedly pay late.

Read more: Tax hike could encourage cowboy builders and punish honest firms

Large businesses paying the new apprentice levy should be asked to prioritise transferring their levy to small, rather than large, businesses, helping to increase apprenticeship opportunities in the building trade.

MPs said the government must also use the revised NPPF to streamline the planning process for smaller firms.

“Government action has started to address some of the needs of small builders, but we must leave no stone unturned to truly unlock the housing market,” said Robert Courts MP, chair of the all-Party parliamentary group.

“A new, dedicated strategy for small housebuilders would be an important step in achieving this. This needs to centre on a positive package of measures that removes some of the biggest barriers for small builders including the inability to access finance and reducing the cost of developer contributions like the Community Infrastructure Levy.”

Mike Cherry, National Chairman at the FSB, added: “Small housebuilders will welcome the cross-party effort to shine a light on the very real challenges that are holding them back from playing their part in building the homes the UK needs.

“It is vital that the government does not turn a blind eye to the findings of this report and commits to creating a dedicated strategy aimed at giving small homebuilders the finance, skills and support they need to help fix the broken housing market.”


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