Challenges facing small housing developers: survey

2. Output

This chapter addresses the following questions:

• What has small developers' output been in the last three years?
• What do they expect it to be for the next five years?

The survey included questions on types of work, private and social sector building, and sales by cost of homes. In each case we report on the findings for the group as a whole, and where there were observable differences, the findings for rural, semi-rural and urban respondents.

Types of work – Previous three years

Respondents were asked a number of questions about the nature of their work over the past three years.

Type of work undertaken

Table 2.1 shows that, for the majority of developers that responded to the survey, all or most of their business over the previous three years was new build only five did no new build work.

Table 2.1: Proportions of types of work undertaken in previous three years

Proportion of their work	New build	Extensions	Refurbishment	Empty homes	Conversions
All	36	0	0	1	1
Most	10	1	3	1	3
Some	6	10	14	3	5
None	5	46	40	52	48
Total	57	57	57	57	57

Most respondents did not build any extensions or undertake any refurbishment work. Only three respondents answered that most of their work was refurbishing existing homes, and one respondent answered that most of their work was extending existing homes.

Most respondents said that none of their business during the past three years had come from contract work, whereas only three said all of their work had come from contract work.

Bringing homes back into use, number of empty home and building conversions

The survey asked respondents who had brought empty homes back into use during the past three years how many they had achieved during this period.

Most respondents did not convert any buildings into homes during the past three years. However, for two respondents, converting buildings into homes was all or most of their business. Of the five respondents who had brought empty homes back into use, two had achieved three, one had achieved four, one had achieved eight and one had achieved twelve.

The survey also asked respondents who had converted buildings into homes during the past three years how many they had achieved during this period. Of the nine respondents who had converted buildings into homes, five had achieved six or fewer, one had achieved 12, two 2 had achieved between 35 and 40, and 1 had achieved 90.

Types of work – Following five years

Respondents were asked a number of questions about expected nature of their work over the next five years.

Type of work expected to be undertaken

Table 2.2 sets out the respondents' expected proportions of work for the following five years. More respondents expected to build new homes in the next five years than built homes in the previous three years (56 compared with 52), and fewer developers expected build none (only one as opposed to five).

Table 2.2: Proportions of types of work expected in next five years

Proportion of their work	New build	Extensions	Refurbishment	Empty homes	Conversions
All	35	0	0	0	0
Most	14	0	1	1	2
Some	7	11	17	10	19
None	1	46	39	46	36
Total	57	57	57	57	57

More respondents expected to bring empty homes back into use (11 compared to five) or undertake conversions (21 compared to nine) over the next five years than did so during the past three years, even accounting for the difference in timeframe.

Number of empty home and building conversions

The survey asked respondents who expected to bring empty homes back into use during the next five years how many they expected to achieve during this period. Of the 12 respondents, seven expected to achieve five or fewer, four expected to achieve from ten to 20, and one expected to achieve 30.

The survey also asked respondents who expected to convert buildings into homes during the following five years how many they expected to achieve during this time period. Of the 21 respondents, twelve expected to achieve six or fewer, five expected to achieve from ten to 20, two expected to achieve between 45 and 70, and two expected to achieve 120 or more.

Sectors

Previous three years and following five years

Respondents were asked if the majority of their organisation's work undertaken during the past three years had been for the private sector or the social sector, and whether they expected the majority of their organisation's work over the next five years to be for the private sector or the social sector.

Table 2.5 shows that a large majority of respondents had built mostly for the private sector during the previous three years and expected to build mostly for the private sector during the next five years. Nine respondents had built mostly for the social sector during the past three years, and eight respondents expected to build mostly for the social sector during the next five years. On the whole, respondents did not appear to expect significant change during the next five years compared to the previous three years.

Table 2.5: Sectors built for in previous three years and expected in the following five years

Sector	Past	Future
Mostly private sector	43	43
Mostly social sector	9	8
Even split	5	6
Total	57	57

Number of homes built

Table 2.6 below shows that private speculative development homes were the most common sector for which developers had built during the past three years. Only ten out of 57 respondents had built no private speculative development homes, whilst 19 had built more than 30. More than half had built no private custom build homes, more than half had built no homes for housing associations, a clear majority had built no homes for local authorities, and most had built no homes for mid-market rent.

However, respondents who had built for the social and mid-market sectors were likely to have built more than thirty homes for those sectors, with 14 out of 19 having built more than thirty homes for housing associations, ten out of 13 having built more than thirty homes for local authorities, and eight out of 14 having built more than 30 homes for mid-market rent.

Table 2.6: Sectors built for in the previous three years

Number of homes	Private speculative	Private custom build	Housing associations	Local authorities	Mid-Market Rent	Other
None	10	33	35	44	43	52
5 or fewer	9	14	0	2	2	1
6-10	11	3	3	1	2	1
11-30	8	0	5	0	2	0
More than 30	19	7	14	10	8	3
Total	57	57	57	57	57	57

Thirty-four developers had not built any homes for either housing associations or local authorities during the past three years. They were then asked in their own words why this was the case and they offered a variety of reasons, with the number who said each shown in brackets:

• Not interested in building social housing (5).
• No requirement to build social housing (4).
• Too difficult for small developers to get contracts (4).
• Never been asked to build for local authorities or housing associations (3).
• New entrant to the sector (3).
• No demand for new social housing in the area (2).
• Lack of available land (2).
• Company not set up to build for local authorities or housing associations (2).
• Lack of buying power (1).
• Procurement methods take too long (1).
• Local authorities and housing associations do not offer a good enough price (1).
• Lack of staff to deal with requirements (1).
• Too risky for small developers (1).
• Unable to find buyers (1).
• Currently building for mid-market rent (1).
• Company has been mothballed (1).

Number of homes expected to be built

Table 2.7 below shows that most respondents expected to build private speculative development homes over the next five years, with more than half of all respondents expecting to build more than 30. Roughly half of respondents expected to build private custom build homes over the next five years, though 15 of these expected to build five or fewer. Just over half expected to build no homes for housing associations, though of those who did, 21 expected to build more than 30. Only 16 respondents expected to build homes for local authorities, though half of those who did expected to build more than 30.

Table 2.7: Sectors expected to be built for in the next five years

Number of homes	Private speculative	Private custom build	Housing associations	Local authorities	Other
None	8	29	31	41	53
5 or fewer	2	15	1	2	1
6-10	3	4	0	3	1
11-30	14	3	4	3	0
More than 30	30	6	21	8	2
Total	57	57	57	57	57

Twenty-nine developers did not expect to build any homes for either housing associations or local authorities during the next five years. They were then asked in their own words why they thought that this would be the case. The reasons given were broadly similar to those given by those who had not built any homes for either housing associations or local authorities during the previous three years. The number who said each are shown in brackets:

• Too difficult for small developers to get contracts (7).
• Not interested in building social housing (5).
• Never been asked to build for local authorities or housing associations (4).
• Lack of available land (3).
• Lack of buying power (3).
• No demand for new social housing in the area (2).
• Lack of staff to deal with requirements (1).
• Too difficult to identify decision makers in housing associations or local authorities (1).
• New entrant to the sector (1).
• Company not set up to build for local authorities or housing associations (1).

Private or social sector building – rural, semi-rural and urban

Table 2.8 sets out the findings by rural, semi-rural and urban groups. Respondents operating mainly in semi-rural areas were somewhat more likely to have built or expect to build mostly for the social sector. Otherwise, there were no obvious differences.

Table 2.8 Sectors built for in previous three years and following five years – rural, semi-rural and urban

Sector	Rural		Semi-rural		Urban
	Past	Future	Past	Future	Past	Future
Mostly private sector	18	20	13	11	12	12
Mostly social sector	4	3	4	3	1	2
Even split	2	1	1	4	2	1
Totals	24	24	18	18	15	15

Homes sold by cost category

The previous two sections considered numbers of builds. Respondents were also asked about the numbers of homes that they sold in different price brackets. House prices differed significantly by location and as most respondents operated in rural areas and, to a lesser extent, the West of Scotland, this will impact on the findings. Once again, the respondents' experience of the previous three years and expectations for the following five years were compared. The findings are set out below in Table 2.9.

Table 2.9: Number of respondents who sold (and expecting to sell) in cost categories

Timescale	Under 175K	175K – 200K	200K – 230K	230K – 250K	250K – 325K	Over 325K
Previous three years	32	33	22	23	21	24
Following five years	39	39	39	36	40	32

*Totals will not match base as respondents sell in more than one category

Over the previous three years, more respondents sold homes in the lowest two cost categories. Fewer respondents sold homes in the higher value categories.

Expectations for the following five years also showed a relatively even spread, with 36-40 out of 57 respondents expecting to sell homes in each category with the exception of the over £325,000 category (32).

Table 2.10 below sets out the number of homes in each price bracket that respondents had sold during the past three years and those they expected to sell over the next five years. It shows that more developers were expecting to sell in each price bracket and that they also expect to sell higher numbers in the £200,000 - £230,000 bracket, the £230,000 - £250,000 bracket, and the £250,000 - £325,000 bracket, even accounting for the difference in time frame.

Table 2.10: Number of homes sold (and expected to sell) in cost categories – All respondents

Number of homes	Under 175K		175K - 200K		200K – 230K		230K – 250K		250K – 325K		Over 325K
	Past	Future	Past	Future	Past	Future	Past	Future	Past	Future	Past	Future
More than 30	10	15	8	11	3	11	2	10	5	10	5	7
Between 6 and 30	13	16	19	21	13	22	8	19	9	20	9	13
5 or fewer	9	8	6	7	6	6	13	7	7	10	10	12
Total selling in category	32	39	33	39	22	39	23	36	21	40	24	32

*Totals will not match base as respondents sell in more than one category

Summary

For the majority of respondents, new build work had been all or most of their output during the past three years, and most expected this to remain the case over the following five years.

More respondents expected to covert buildings into homes or bring empty homes back into use over the following five years than did so during the previous three years.

Fewer respondents had built for the social sector than for the private sector, but more respondents expected to build in each sector during the following five years than had during the previous three years.

More respondents expected to sell homes in each of the price brackets in the following five years than had done in the previous three years, especially in the £250,000 to £325,000 price bracket, though as the timeframes were different, it should be caveated that these figures are not directly comparable.