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State of play in the SME housebuilding market

By Dan Teuton
16 November 2020

Close Brothers Property Finance and HBF Report

Earlier this year, Close Brothers Property Finance, the development finance specialists, and the Home Builders Federation (HBF), the national trade body for housebuilders, conducted one of the most comprehensive surveys of Small and Medium Enterprise (SME) housebuilders – Spotlight on the South East.

The research examined how the sector was performing during the Covid-19 pandemic, what the barriers for growth are and recommendations to support the sector throughout this uncertainty. Here Close Brothers share the exclusive results from the South East region, which accounted for 53% of the respondents.

Growth projections

Within the South East of the UK, two thirds of SME housebuilders (64%) have said their growth projections are down due to Covid-19 by up to 50%, which underlines the need for further Government support for the sector during the winter and 2021.

The majority of SME’s surveyed produced between 10-50 homes per annum, playing a vital role in addressing the growing housing shortage across the South East and the economic benefits which housebuilding brings to the local economy. The report also highlighted the important role SME’s play in local employment and training, with 28% employing apprentices and 31% employing up to 50 people directly.

Help to buy

Help to Buy has been a lifeline to this part of the market with 80% of the survey respondents using the initiative on 31% of their new homes sales (mean average).

The hiatus of construction during the coronavirus lockdowns and the inhibition of production capacity due to social distancing measures on sites have inevitably resulted in delays to build programmes. As such, there are thousands of property purchases at risk of falling through as they are ineligible for the new scheme; either because of the purchaser’s eligibility or because of the regional price caps that will come into effect under the new, 2021-23 Help to Buy programme.


Planning continues to be a particular concern when it comes to industry growth and the delivery of homes. Indeed, 86% of South Eastern respondents cited delays in securing planning permission or discharging of planning conditions by local authorities as a major barrier to increasing housing delivery over the next twelve months. With 75% of SME housebuilders seeing a lack of resource in local authority planning departments as a major barrier.

SMEs are disproportionately affected by planning setbacks, as they may have their capital tied up in just one or two projects at a time. As a result, lengthy delays can bring their business to a halt.

Development finance

In the challenging post-Covid environment, the availability and terms on which development finance is offered to SME developers will continue to be of considerable importance. It is encouraging that development finance was rated as the lowest barrier to growth by SME housebuilders, with 42% not considering this to be a barrier to growth.

Frank Pennal, CEO at Close Brothers Development Finance, commented: “This research underlines the need to support and protect SME housebuilders, who have consistently demonstrated their value when it comes to economic growth and directly supporting communities across the South East. Not only do SME housebuilders provide a training ground for young apprentices and trainees, they are the lifeblood of these regional property markets, and safeguard diversity of design, skills and craftmanship within the industry. We are proud to support the SME market and will continue to ensure that this industry not only survives these challenging times, but is able to thrive in spite of them.”

The full national report is available on the Close Brothers website:


Over the past four decades, Close Brothers Property Finance has provided personalised, flexible finance to property developers and investors across the property industry, consistently supporting small and medium-sized businesses. Part of the FTSE 250 Close Brothers Group, the bank is currently funding over 5,000 homes with a loan book of £1.4 billion, with bespoke financial products including development finance, bridging loans and commercial investment.



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