Challenges facing small housing developers: survey

Conclusions

Overall, small housing developers in the survey appeared to be relatively optimistic about the numbers of homes that they expected to deliver in the five years following this survey. Nevertheless, they still expected to face a number of obstacles, such as problems with infrastructure, difficulties with the planning system, financial barriers and delays in delivery of utilities. They expressed frustration over additional work, loss of income and viability problems stemming from these obstacles.

Output

The majority of respondents were focused primarily or exclusively on new build work, and more respondents expected to build new homes during the next five years than did during the previous three years. More respondents expected to convert buildings into homes over the next five years than did during the previous three years, and more respondents expected to bring empty homes back into use over the next five years than did during the previous three years. Fewer respondents built for the social sector than for the private sector, but more respondents expected to build for the social sector over the next five years than did during the past three years. More respondents also expected to sell homes across the full range of price brackets in the following five years than had during the previous three years. It should be caveated that the difference in timeframes means that these results are not directly comparable, but they do suggest that more developers were expecting to enter a wider range of sectors and activities in the future.

Obstacles

The biggest obstacle for SME developers during the past three years was found to involve the planning system. The majority of respondents had experienced difficulties with obtaining planning consent for development during the previous three years and also expected this to be the case during the next five years. Most respondents had also experienced difficulties with infrastructure during the past three years, such as with negotiating S75s and meeting S75 obligations. More than one in three respondents had experienced a lack of skills during the past three years, and similar numbers expected this to continue. On the other hand, fewer respondents expected to experience financial obstacles over the next five years than had experienced them during the past three years, suggesting a level of optimism in this area.

Solutions

Respondents called for a range of actions from both local and national government that they believed would improve their organisation's output. This included action on funding and finance, such as more public funding for development, and working with banks to develop solutions to the difficulties over the lack of development finance, the cost of development finance, and lending criteria. Respondents also called for central government to influence local authorities and utility companies on planning and the delivery of utilities. Scottish Water was frequently identified as a particular issue.

Respondents also saw the value in themselves either individually or as a group engaging more openly with government and utility providers in order to foster mutual understanding and develop relationships that could be used to overcome obstacles. Further to this, some respondents suggested that the industry could address the skills shortage by training more apprentices.

Government Initiatives

The Help to Buy schemes were well known by SME developers. Most respondents had registered under one of the schemes, and roughly half had made sales under at least one of them. However, most had not made any sales under the Help to Buy schemes during the past three years, and most did not expect to make any sales under it during the next three years. Levels of knowledge and engagement with the Building Scotland Fund and the New Scottish Shared Equity scheme were far more limited.

Staffing and subcontractors

Just under half of respondents currently employed apprentices. Of these, most intended to retain them once they had completed their apprenticeship.

Almost half of respondents did not currently employ any staff. For most respondents, their number of employees had either increased or stayed the same during the past three years. However, most respondents used a wide range of subcontractors, with some contracting out all of their work.