The Prime Minister's bold vision to fix the broken housing market once and for all has underscored numerous government policy announcements in recent months. The Chancellor's Budget this week may nod in this same direction, but the property market should not expect a cash windfall or a hand-up from the Treasury in the months to come.
In his housing white paper, Communities Secretary Sajid Javid made it clear that the onus is on industry, local and national government to work together to tackle the shortage of homes. His paper acknowledged the important role of SMEs in the property sector, but didn't deliver policy to meaningfully challenge the dominance of larger housebuilders. Our report out this week sought to address this.
What we found was that it's been 30 years since our last housebuilding boom. In those three decades, not only has annual housebuilding output dropped by as much as 50% at its worst point, but the number of small-scale housing developers has sunk by a breathtaking 80%.
For the backers of small property companies - and as the founder of a small business myself - this is a staggeringly disappointing statistic.
The impact is two-fold. First, fewer homes are being built on UK streets, most problematic where housebuilders aren't incentivised or able to fill the shortfall. The HBF has said that if we were to return to the same level of market plurality as in 2007 even, we could build 25,000 more homes every year.
Secondly, this dramatic decline has a knock-on effect on the wider economy: less employment, lower levels of entrepreneurialism and less confidence among graduates and young professionals to choose the property sector in which to build their careers.
In post-war times, housing supply peaked at the same time that small-scale property entrepreneurs were flourishing. If we don't recognise the contribution of property SMEs today, we will lose another generation of property entrepreneurs and the UK will feel the impact severely.
The UK has the highest property taxes in the developed world. That's a showstopper in itself for many would-be developers or investors. However, it's not just tax that policymakers need to address to make building a small-scale property business as favourable as, or akin to, the experience in other productive sectors.
Intervention must be made by government to help encourage the growth of these businesses, giving them the confidence that their contributions are treated on par with start-ups and scale-ups in other productive sectors. Measures must be taken to designate public land for SMEs to buy at preference, while the ministers in BEIS and DCLG should work together to increase competition in the sector as they do in other areas. Capital should also be deployed through the Homes and Communities Agency and British Business Bank swiftly to these small businesses.
Only this way can we truly loosen the grip of dominant large-scale housebuilders on the land, skills and finance that smaller companies need to function well.
Across government, the commitment has been made to remedy the chronic under-delivery of homes in the UK. To secure the next generation of property investors, regenerators and builders, we must see these policies put cash and land in the hands of SMEs, and sooner rather than later.Suggest a correction