Building Britain’s homes – unlocking SME delivery
In the first of our three part series following panel events in the Lloyds Bank Pavilion at UKREiiF , we lay out the challenges facing SME housebuilders – who are often the first to feel the force of regulatory and economic headwinds – and look at the options to accelerate delivery.
The session, chaired by Dave Brigden , Sector Director for Real Estate & Housing at Lloyds Bank, featured:
Discussed amongst the panel of experts was the state of play within the housebuilding sector, the challenges that small builders are facing, and the routes to mitigating those and providing them with a platform to build more.
Barriers to delivery
Challenges around planning and regulation were a recurring talking point, the crux of the issue being that the length of time between submitting planning applications and then starting on site is increasing dramatically. Sometimes up to three times longer, compared to this time five years ago.
This represents a challenge for SMEs that operate with narrower margins and rely on a healthy, consistent cash flow. The longer they’re stuck waiting to start on site, the longer they’re facing a period with little incoming cash to pay for operational overheads. This is why many small builders are struggling, according to our panellists.
This also equates to a drop in the industry’s productivity, resulting in a wealth of untapped capacity within the housing market ready to be unlocked. Indeed, the HBF says that its members are on roughly only 50 per cent of the projects that they have the resource to support.
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Unlocking capacity
“SMEs play a really critical role in the housing ecosystem, and the challenges are having an acute impact on small housebuilders,” Dave commented. Eleanor, Nigel and Neil agreed and noted that periods when the housebuilding sector has been at its peak have been when SMEs have been allowed to flourish. So how can we reach that again?
Placing additional resource in the planning system is a strong long-term solution, said our panellists. Teams in local authorities across the UK need extra support to help clear the backlog of planning applications, and preventing delays here will keep SMEs agile and their cash flow moving.
However, support is needed immediately to alleviate the cash flow issues that are affecting many SMEs. One bright spot in the industry that was noted is the availability of financing, with lenders such as Lloyds Bank offering greater support for businesses to win new work and grow.
We’re working hand-in-hand with businesses to build a stronger working capital position by thoroughly planning ahead, mapping out every stage of building activity possible. This allows firms to forecast where there may be a dip in cash flow and provide innovative funding solutions to respond.
To learn more about the solutions that can help your business grow and build more homes, visit https://www.lloydsbank.com/business/industry-expertise/real-estate.html