FMB House Builders' Survey 2021 - fmb.org.uk
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FMB House
Builders‘
Survey 2021
fmb.org.uk
Contents 4 Executive summary 6 Introduction and context 7 Respondent profile and industry structure 8 Main constraints on supply 10 Buyer demand 11 Access to finance 13 Small sites and land availability 15 The self and custom build market 16 The planning application process 18 Developer contributions and viability 20 Workforce and skills 21 A guide to biodiversity net gain 2 FMB House Builders‘ Survey 2021 Project by Keigar Homes Ltd
FMB House Builders‘ Survey 2021 3
Executive summary
The Federation of Master Builders’ (FMB) annual House Builders’ Survey aims
to build a clearer picture of the experience of small and medium-sized (SME)
house builders in England. It is the only annual survey of its kind to do so.
In 2021, the availability of land Main constraints Access to finance
is the most prominent barrier
to SME house builders’ ability to
on supply • When asked to rate lending
build more homes. It is the most • The ‘lack of available and viable conditions to SMEs for
commonly cited constraint to land’ is the most commonly cited residential development from 0
growth and in addition nearly constraint (63% of respondents) to 5, the average score was 2.34
three quarters of respondents on SME house builders’ ability to – the highest score since the
say that the number of small site build more homes. question was first asked in 2013
opportunities is decreasing. This .
prompts questions as to whether • This is closely followed by • ‘Fees charged on new or existing
national policies to promote ‘materials shortages’ (62%) and loans’ was rated as the most
small sites are in fact being ‘the planning system’ (61%). significant finance-related issue,
implemented. just ahead of ‘poor loan to asset
• ‘Lack of finance to the company’ value ratios’.
On the positive side, assessments (29%) has dropped significantly
of buyer demand are extremely and has fallen out of the top • Private equity (used by 41%
buoyant, access to finance for three responses for the first time, of respondents) has replaced
SME house builders appears to but ‘shortage of skilled workers’ high street banks (used by 32%
have improved significantly and (53%) has risen sharply. of respondents) as the most
many more respondents are common source of finance.
planning to grow their workforce
over the next year than are
Lack of available land • 45% of respondents stated that
planning to shrink it. is the biggest barrier to there are sites that they have
building more homes an interest in that are stalled for
finance-related reasons.
Buyer demand Assessments of access
• When asked to rate current buyer to finance have
demand in the housing market improved
(out of 5), the average score was
3.86 – the highest average score
this question has received since it
was first asked in 2013.
Assessments of buyer
demand are extremely
Project by J P McDonagh
Construction Limited
positive
4 FMB House Builders‘ Survey 2021
Small sites and land Planning application Developer
availability process contributions
• 71% of respondents report • Respondents rated ‘inadequate • 57% of firms said that there are
that the number of small site communication by officers’ as sites that they would otherwise
opportunities is decreasing; the most significant cause of be interested in, but which they
only 4% say that the number is delay in the planning application believe would be unviable due to
increasing. process, closely followed by likely developer contributions.
‘inadequate resourcing of
• 11% of respondents believe that planning departments’.
small sites are being taken more
Workforce and skills
seriously by planners and local • Respondents rated ‘overall • 36% of respondents are planning
authorities. complexity and the cost of to grow their on-site workforce
consultants required to deal over the next year, against just
with this’ as the most significant 7% who are planning to decrease
Nearly three quarters cause of additional cost in the their on-site workforce.
say small site planning process.
opportunities are • More firms say that they are
decreasing • Only 19% of respondents feel employing apprentices (31%),
either a ‘very high’ or ‘quite offering work experience (30%),
high’ degree of certainty over training new workers (26%) or
The self and custom the outcome of planning up-skilling existing workers (46%)
applications; 33% feel they have
build market ‘quite low’ or ‘very low levels’ of
than did last year.
• 63% of respondents said that certainty; and 48% say they feel
a significant increase in the medium levels of certainty.
More than a third
number of people able to access will be growing their
the self and custom build market workforce over the
would have a positive impact on
Only 19% feel high next year
their business and their ability to levels of certainty
build more homes; 28% believe over the outcome of
it would be very positive. planning applications
63% say boosting self
and custom build will
help them build more
homes
FMB House Builders‘ Survey 2021 5
Introduction and context
This survey, now in its tenth if they did not face significant despite amendments to national
successive year, helps us to barriers to doing so. planning policy requiring local
build a more comprehensive planning authorities to enable
understanding of the experience Reducing these barriers will enable development on a wider range
of small and medium-sized (SME) existing small developers to of sites. Responses to this survey
house builders in England, and expand and deliver more homes raise real questions as to whether
allows us to track this over time. It and it will facilitate more new these changes are yet being fully
is the only annual survey of its kind entrants to the market, including implemented.
to do so. the large numbers of skilled small
contractors who have the ability Responses and comments also
The position of SME and willingness to bring forward show high levels of frustration
their own developments, if the at the delays and uncertainties
house builders business environment were more thrown up by the planning
The context for this survey is the conducive to them doing so. application process, with blame
severe decline in the SME house being placed on both inadequate
building sector that we have seen Change over time resourcing and lack of positive
over a number of decades. In the engagement by planners.
1980s, SME house builders built Over the last five years’ we have Percentages citing both planning
40% of new homes, but they now seen government policy, and and land availability as major
build only 12%. Over this period, policy of all the major parties, take concerns have jumped-up
the supply of new homes has on board these concerns. This significantly from last year.
therefore become increasingly survey shows that in some areas
reliant on a relatively small number we are now seeing some signs of New and emerging
of larger scale house builders. improvement. In 2012, access to
finance was the most prominent concerns
This has undoubtedly had a barrier facing SME house builders, Last year, some results reflected
damaging impact on the capacity, cited by 72% as a major barrier the serious uncertainties caused
competitiveness and diversity of on their ability to build homes. by the pandemic and Brexit. These
the house building industry and This year we have seen that figure factors continue to influence this
has likely served to slow down the fall to 29%, in part thanks to year’s results, not least in the fact
delivery of new homes, as delivery targeted policies and interventions that we are seeing concerns over
has become more concentrated influenced by the data revealed in materials shortages and skills
on larger schemes. The FMB our surveys. shortages emerge for the first
believes that the industry is unlikely time as among the most pressing
to be able to sustainably deliver Longstanding constraints on SME builders.
300,000 high quality homes per These now pose real and
year without a reverse in the
frustrations significant challenges which
decline of SME house builders. However, other areas have proved policymakers and industry itself
more resistant to improvement. will need to address. The FMB will
The evidence of this survey has Concerns over availability of draw on this survey to continue
consistently been that many SME land and the lack of small site to work with all parties to raise
house builders would be able to opportunities have, if anything, awareness of, and seek long-term
expand their output of new homes grown rather than diminished, solutions to, these issues.
6 FMB House Builders‘ Survey 2021 www.fmb.org.uk
Respondent profile
and industry structure
The profile of respondents to Business models
the House Builders’ Survey is 66% of respondents said
reflective of those parts of the • 46% of respondents build
that this year they will
FMB membership and wider homes only as contractors; 10%
build between one and
construction industry that are build homes only as developers;
and 44% build as both
ten units
active in smaller-scale house
building. developers and contractors.
• Of those who build as a 46% of respondents
In FMB membership, just over
contractor, 86% build new build homes only
half of more than 7,000 members
homes to the plans and as contractors; 10%
are engaged in house building
activity, as part of a wider suite of specification of a homeowner build homes only as
services. 15% of members say that (also known as self and custom developers; and 44%
house building is their main area of build), 40% build for other build as both
activity. developers or main contractors,
and 9% build for housing
associations. The great majority of
Sample
respondents (75%)
• The survey received 123 Site sizes typically tend to
responses from SME house concentrate on sites
builders. • The great majority of
respondents (75%) typically of between one and
.
tend to concentrate on sites of five units
• All respondents were FMB
members in England who list between one and five units; 37%
house building as one of their focus solely on sites of one unit;
main trades. 13% build sites of more than 10
units; and 4% build sites of 25
units and more.
House building output
• 66% of respondents said that
this year they will build between
one and ten units; 5% of
respondents will build between
11 and 30 units; 1% will build
between 31 and 100 units; and
28% will not build any new
homes in 2021.
• When asked to forecast output
in 2022, 71% expect to build
between one and ten units; 10%
between 11 and 30 units; 1%
between 31 and 100 units; 1%
more than 100 units; and 17%
do not expect to build any new
homes in 2022.
Project by Mendip
Developments Ltd
www.fmb.org.uk FMB House Builders‘ Survey 2021 7
Main constraints on supply
Each year this survey asks SME responses all are cited by a high Significant changes
house builders what they consider percentage of respondents. The
to be the main barriers to their top three answers all register
in 2021
ability to build new homes. We can above 60%. By comparison, in However, this year we can see
therefore track responses to this 2019 and 2020 the top responses some significant changes. For
question over time (see Figure 1). were 43% and 48%, respectively. the first time materials shortages
appears among the top responses,
Greatest barriers to Over the past eight years there cited by 62% compared to a
has been a relatively high level previous high of 24% in 2018
building of consistency in these results and 2020. ‘Shortage of skilled
In 2021, the ‘lack of available (see Figure 1). Lack of available workers’ rises above 50% for the
and viable land’ is the most and viable land has been the first time, against a previous high
commonly cited barrier to building top response in six of the of 43% in 2018. These concerns
more homes (cited by 63% of previous eight years and are not a surprise. The FMB’s Q2
respondents). Land is closely concerns over the availability of 2021 State of Trade Survey found
followed by ‘materials shortages’ land, availability of finance and 98% of SME builders reporting
(62%) and ‘the planning system’ the planning system have been material price rises, 53% struggling
(61%). See Table 1 for full results. the top three concerns in every to hire carpenters/joiners and
It is noteworthy that these top year since 2013. 47% struggling to hire bricklayers.
Table 1: Q. What would you say are the main constraints, if any, on your ability to build more homes i.)
currently and ii.) looking ahead over the next three years?
Constraints Currently Over the next
three years
Lack of available and viable land 63% 62%
Materials shortages 62% 49%
The planning system 61% 54%
Shortage of skilled workers 53% 54%
Cost of Section 106 agreements 33% 29%
Cost of Community Infrastructure Levy (if applicable) 33% 34%
Lack of finance to the company 29% 32%
Restricted mortgage availability 16% 16%
Cost of national regulations 10% 10%
Cost of locally imposed standards 9% 9%
No constraints 4% 4%
8 FMB House Builders‘ Survey 2021 www.fmb.org.uk
However, the extent to which concerned about materials On the other hand, land availability
these are now being seen as major shortages (from 62% to 49%) and is slightly more of a concern for
constraints on house building the planning system (from 61% to those who work as contractors,
activity is striking. 54%). There are slight increases in and it becomes slightly less of
those concerned about ‘shortage a problem the more units per
The other notable change is that of skilled workers’ and ‘lack of year and the larger the sites a
access to finance has fallen down finance to the company’. firm tends to work on. Given
the list of concerns significantly. the percentage of contractor
This has been trending downwards Responses can differ by respondents who build for
over the last five to six years but has private clients, it also suggests
dropped sharply again from 41%
type of firm that availability of sites for self-
in 2020 to 29% this year. This is in Analysis of responses on build opportunities could be a
keeping with other indicators which constraints to supply broken contributory factor here. It is also
reflect an improved development down by firms’ characteristics notable that, of those firms who
finance market for SME developers, (i.e. business model, output and are not building any homes in
albeit one that continues to be site sizes) reveal some important 2021, land availability is clearly the
challenging for many (see ‘Access differences and some notable greatest concern.
to finance’ section). constants. Perhaps not surprisingly,
the planning system is a greater Concern over materials shortages
concern for those who work as was consistently high among all
Looking ahead types of firm, all levels of output
developers than it is for those who
When we asked house builders to work as contractors, but it is also and all site sizes, although it
look ahead at the main barriers a greater concern for those who was slightly higher among those
over the next three years, there build more units per year and work building out sites of more than
are significant drops in those on sites of ten units or larger. ten units.
Figure 1: Q. What would you say are the main constraints, if any, on your ability to build more homes?
(Responses to this question from 2014-2020 surveys)
www.fmb.org.uk FMB House Builders‘ Survey 2021 9
Buyer demand
Respondents’ assessments of people and the rise of remote “People leaving cities/office hubs
buyer demand suggest that it working, had caused people to as they are able to work from
is extremely strong right now. reassess where and how they home now.”
Current buyer demand was rated wanted to live.
on average at 3.86 (out of 5), the A lot of respondents also noted the
highest score yet returned since important role that the reductions
this question was first asked in “The level of demand has been in Stamp Duty Land Tax had played
2013. extremely high as people seek to in supporting the market over the
change their living habits on the past year, and an equal number
back of Covid. Lifestyle change
This marks a sharp upturn in the mentioned the general shortage of
in my opinion has brought about
assessment of buyer demand from a need for more outside space, properties on the market
last year (see Figure 3). Last year’s and additional room to work from
survey was taken when we were home, which has provided many “Reduced Stamp Duty. House
still in the relatively early stages with a complete change in how buyers moving out of the city and
they work and live.” towns.”
of the pandemic and respondents
reported that the economic
uncertainty caused by Covid-19, “The pandemic has created the “Low stock levels. Not enough
and to a lesser extent Brexit, had perfect storm for the residential houses on the market currently.”
led to a sharp drop-off in demand. sector, giving a slight wake
up call on the need to provide Assessments of future demand
Demand has clearly rebounded good levels of housing stock in suggest that respondents
a variety of forms, and allowing expect demand to moderate
strongly. When asked to explain
people to seek these in more areas
their assessment of buyer demand, than perhaps would have been
slightly over the next two years,
the most common response was expected.” but to remain relatively strong
that the pandemic, its impact on (see Figure 2).
Figure 2: Q. How would you assess/predict buyer demand in the
housing market (out of 5, where 0 reflects very low demand and 5
reflects very high demand)?
One year ago 3.14
At this moment in time
3.86
(Aug21)
In a year’s time 3.53
In two year’s time 3.26
0 0.5 1 1.5 2 2.5 3 3.5 4
Figure 3: Q. How would you assess/predict buyer demand in the
housing market (out of 5, where 0 reflects very low demand and 5
reflects very high demand)?
3.86
4
3.5 3.31 3.35 3.26 3.14
2.90
3 2.38
2.5
2
1.5
1
0.5
0
2015 2016 2017 2018 2019 2020 2021 Project by Kisiel Group
10 FMB House Builders‘ Survey 2021Access to finance
The percentage of SME house for the previous three years, was
builders citing access to finance the second most raised issue
as a major barrier to growth has (see Figure 4). These concerns
been trending downwards in are reflected in respondents’
recent years. It rose back up last comments (see below).
year in the midst of the pandemic,
but it has fallen significantly again
this year.
Sources of finance
It is also interesting to note the
Respondents’ assessment of changes in the sources of finance
lending conditions adds further which respondents are using (see
weight to this. When asked to Figure 5). In comparison to last
rate lending conditions to SMEs year’s responses, we can see a
for residential development from shift away from high street banks
0 to 5, the average score was as a source of finance – 32%
2.34 – the highest score recorded of respondents say that this is a
since the question was first asked source of funding, down from
in 2013. 48% in 2020 – and towards
private equity (including personal
Table 2 shows how dramatically contacts), which is up to 41% from
this has changed over the past 25%. We also see increased use of Bank and Homes England
nine years. In 2013, the average challenger and overseas banks and offering equity finance to house
score was just 0.95, with 41% crowd-funding and other non- builders.
of respondents scoring lending bank platforms.
conditions to SMEs at zero out of The development
five. This shows just how severe a Interestingly, a couple of
problem access to finance was for respondents report having
finance market
SME house builders at some points made use of the Government’s All these findings support the
in the last decade. Home Building Fund; one conclusion that the development
reports having acquired lending finance market for SME house
Respondents rated ‘fees charged supported by the ENABLE Build builders has become steadily
on new or existing loans’ to be the guarantees (supported by the more favourable over the last six
most significant finance-related British Business Bank and Homes to seven years, as the market has
concern they faced. ‘Poor loan England); and another through diversified, with increasing appetite
to value ratios’, which has been the Housing Growth Partnership, among smaller specialist lenders
rated as the most significant issue a partnership between Lloyds and challenger banks to lend to
Table 2: Q. What is your experience of the current lending conditions to SMEs for residential property
development (score where 0 reflects very poor conditions and 5 reflects excellent conditions)?
Average
0 1 2 3 4 5 “Initial rate
score is attractive,
2021 8% 17% 27% 35% 8% 5% 2.34 but increases
substantially once
2020 12% 23% 31% 25% 6% 3% 1.98 you get down to
the final figures.”
2019 10% 20% 26% 35% 9% 1% 2.15
2018 13% 24% 24% 29% 7% 3% 2.02 “Expensive setting
2017 25% 23% 20% 28% 4% 0% 1.63 up and exit fees.”
2016 18% 24% 24% 26% 8% 1% 1.85
2015 23% 22% 31% 24% 1% 0% 1.59
2014 36% 22% 30% 9% 1% 1% 1.20
2013 41% 30% 22% 7% 0% 0% 0.95
FMB House Builders‘ Survey 2021 11“You need a huge deposit “Too slow on decision making and most firms are not
for land and build costs.” interested in the small developer/contractor.”
Figure 4: Q. How significant are the following finance-related issues in restricting your
ability to increase your house building activity (out of 10, with 0 being not significant at all
and 10 being extremely significant)?
4.88 2021
Refusal of loans 5.78
2020
4.61
Interest rates charged on new loans 5.35
5.76
Poor loan to asset value ratios 6.40
5.96
Fees charged on new or existing loans 6.22
5.24
Limitaions on business overdraft facilities 5.43
0 1 2 3 4 5 6 7
smaller scale developers. SME borrowing is therefore relatively that there are sites that they are
house builders may also have high and loan to value ratios remain involved in that are stalled for
benefited from an extended period a structural constraint to growth finance-related reasons.
of low interest rates, which enables for many. The market is particularly
them to offer attractive returns to difficult for new entrants without a Government should continue
high net-worth individuals (hence track record or accumulated assets. to support and develop a range
increased use of private equity and It is important we continue to seek of targeted interventions, like
brokers seen in Figure 5). interventions which can help to the Home Building Fund, the
reduce such barriers. ENABLE Build programme,
However, borrowing from smaller and partnerships between
lenders tends to come at a higher As comments by respondents Homes England and individual
price, which is not immediately make clear, access to finance is lenders, which are now
obvious from the headline rates still a serious barrier to growth helping to support a healthier
(hence concern over the fees for many, and indeed 45% of development finance market
applied to loans). The cost of respondents continue to report for SME house builders.
Figure 5: Q. Which of the following ways do you tend to acquire funding for development (tick all that apply)?
Self build/Custom build contract 39% 2021
30%
2020
High street banks and building 32%
societies 48%
Other banks (including challenger, and 20%
overseas banks) 12%
Crowd funding or other non-bank 13%
lending platforms 5%
Private equity, including local contacts 41%
or family/friends 25%
Finance brokers 20%
16%
0% 10% 20% 30% 40% 50% 60%
Project by Stonewood Builders Ltd
12 FMB House Builders‘ Survey 2021 www.fmb.org.ukSmall sites and land availability
In this year’s survey, ‘lack of diminished significantly over authorities and Homes England
available and viable land’ is the time, though redevelopment and should also be much more
most commonly cited constraint changes of use should continue to proactive in working with
on SME house builders (cited by throw up some new opportunities. developers to encourage some
63%), and we know that this is a However, SME house builders sub-division of larger sites
slightly greater concern for those commonly report that they know where this is appropriate.
who work on the smallest sites and of numerous small sites in suitable
those who build for private clients. locations for new housing, but in 11% of respondents believe
which the local authority appears that small sites are being taken
In addition, 71% of respondents entirely uninterested. more seriously by planners and
reported that the number of small local authorities (see Table 3).
site opportunities is decreasing In some locations, more could However, this is a small number
(see Table 3). Only 4% said that and should be done to enable and is considerably lower than the
the number is increasing. This is a small site opportunities on the 41% who answered positively to
stark finding. edge of existing settlements, this question in 2018.
allowing for incremental,
It is in the nature of small sites organic development, where In 2018, the Government
that in some locations the number there is clear community amended the National Planning
of high value infill sites will have demand for housing. Local Policy Framework (NPPF), adding
71% of
respondents
reported that
the number
of small site
opportunities is
decreasing
www.fmb.org.uk FMB House Builders‘ Survey 2021 13Project by Mendip Developments Ltd
paragraph 69 which requires paragraph 69, including
planners to promote a good monitoring local authority
mix of small and medium- delivery.
11% believe
sized sites in a number of ways,
including a requirement to identify There are very good reasons that small sites
land to accommodate at least to do this beyond its impact are being taken
10% of their housing requirement on SME builders and the local more seriously by
on sites of no larger than one industry. Enabling small site
hectare. opportunities should also
planners and local
serve to speed up the delivery authorities, down
However, when asked in this of new homes and promote from 41%
survey, only 5% of respondents greater choice and quality in in 2018
said that this policy had yet new housing.
led to an increase in small site
opportunities (see Figure 6). Local authorities should
understand and acknowledge
There must now be a the strategic importance of
much stronger focus on proactively enabling a range
implementation of the of deliverable smaller sites to
requirements in NPPF come forward.
Table 3: Q. On the issue of the availability of opportunities for small site development, which of the following
statements do you agree with (please tick all those you agree with).
2021 2020
The number of small site opportunities is decreasing 71% 64%
The process of obtaining planning for small sites seems to be getting
54% 37%
worse
The number of small site opportunities has not changed 13% 19%
Small sites are being taken more seriously by planners and local
11% 19%
authorities
The process of obtaining planning for small sites seems to be
9% 10%
improving
The number of small site opportunities is increasing 4% 7%
Figure 6: Q. Since 2018, the NPPF has required local
authorities to identify enough small sites (of one hectare or
less) on which to accommodate at least 10% of their housing
requirement. Is this policy yet driving an increase in small
site opportunities for you?
Yes 5%
No 66%
Don’t know 29%
0% 10% 20% 30% 40% 50% 60% 70%
14 FMB House Builders‘ Survey 2021 www.fmb.org.ukThe self
and custom
build market
Among respondents to this survey
who work as contractors, 86%
have worked for clients who are
building their own homes. We
know that some SME developers
also follow a client-led custom
build approach. Therefore, this
market is clearly a significant one
for SME house builders. Project by Mitchells Construction & Development Ltd
When asked, 63% of respondents
said that a significant increase
in the number of people able to Only 13% believe it will have In accordance with these findings,
access the self and custom build a negative impact. The only the FMB believes that enabling
market would be good for their unfavourable comment expressed more people to access self and
business and their ability to build a concern that this could decrease custom build solutions would
more homes. This included 28% small site opportunities for those have a significant net positive
who believe it would be very not pursuing a self or custom impact on the SME house building
positive (see Figure 7). build approach. sector and its ability to build more
homes, while helping to create a
healthier, more diverse housing
market.
Figure 7:Q. If there was a significant increase in the number of
people able to access the self and custom build market, what effect We welcome the Government’s
do you think this would have on your business and your ability to commitment to expanding access
build more homes? to this market and urge them
to adopt the recommendations
of the Bacon Review, including
Very positve
28% a sustained effort to raise
effect awareness of the Right to Build.
Fairly positive
35%
effect “This is a hugely underinvested
area. We undertake only a few
No effect 23% self-build schemes, but there
should be many more available.
Fairly negative Local Authorities do not
8% support or prioritise these.”
effect
Very negative
5%
effect
0% 5% 10% 15% 20% 25% 30% 35% 40%
63% of respondents said that a significant increase
in the number of people able to access the self
and custom build market would be good for their
business and their ability to build more homes
www.fmb.org.uk FMB House Builders‘ Survey 2021 15Respondents
rated ‘inadequate
communication by
officers’ as the most
significant cause
of delay in the
planning system
The planning application process
In this year’s survey, 61% of When asked to rate the significance departments, as they are a result
respondents identified the planning of different causes of delay, of the chronic under-resourcing
system as a major constraint respondents rated ‘inadequate that many departments
on their ability to build more communication by officers’ as the undoubtedly face.
homes (see Table 1). The planning most significant cause of delay
application, or development in the planning system (see Table The FMB continues to call on the
management, process is a key 4). In the previous three years, Government to enable greater
element of these frustrations. ‘inadequate resourcing of planning resourcing of local planning
We have also seen that 54% of departments’ has ranked first, departments as a matter of
respondents believe the process of closely followed by inadequate urgency. At the same time,
obtaining permission for small sites communication. This year those planning departments must
is getting worse (see Table 3). rankings have reversed. engage in a more proactive and
ongoing dialogue with SME
The disproportionate delays which This is reflective of conversations builders, for instance through
can be involved in getting an with SME house builders who feel local developer forums, to
implementable permission for even that delays are as often the result improve mutual understanding
the smallest sites, tie up resources of a culture of unresponsiveness and seek to minimise
and can be difficult to plan for. that can exist within some unnecessary burdens and delays.
Table 4: Q. How important would you rate the following as causes of delay in the planning process? Score
from 0 to 5, where 0 is completely unimportant and 5 is extremely important.
Causes of delay 2021 2020 2019 2018
Inadequate communication by planning officers 4.10 3.79 3.99 3.58
Inadequate resourcing of planning departments 3.93 3.80 4.03 3.89
The signing off of planning conditions 3.69 3.29 3.63 3.47
Signing off of Section 106 agreements 3.51 3.09 3.58 3.37
Delays caused by statutory consultees 3.49 3.38 3.71 3.24
Negotiating Section 106 agreements 3.47 3.24 3.44 3.47
16 FMB House Builders‘ Survey 2021 www.fmb.org.ukWhen asked what one thing SME house builders would change about the planning system,
responses included:
“Produce better, black and white guidelines “Without the right people, no matter what
for developers and train planning officers you look to do to resolve the system, those
to implement them correctly.” issues will remain if there are no additional
or even fully staffed departments to facilitate
“Seek to resource the LPAs with qualified, or implement any meaningful changes.”
motivated and engaging staff on all levels.”
“Get more planners and get them all back in
“Be more consistent.” the office to answer phones and emails.”
Table 5: Q. How important would you rate the following as causes of additional cost in the planning
process? Score from 0 to 5, where 0 is completely unimportant and 5 is extremely important.
Causes of additional cost 2021 2020 2019 2018
Overall complexity and the cost of consultants
4.08 3.77 4.02 4.01
required to deal with this
Excessive information requirements 3.96 3.74 4.19 4.20
Costs imposed by delays in the system 3.94 3.73 3.95 4.17
Fees for pre-application discussions 3.54 3.23 3.59 3.64
Figure 8: Q. On average, how much certainty do you feel about the outcomes
of planning applications?
Very high degree of certainty 1%
Quite a high degree of certainty 18%
Medium certainty 48%
Quite a low degree of certainty 27%
Very low degree of certainty 5%
0% 10% 20% 30% 40% 50% 60%
Respondents rated ‘overall uncertainty they face over the
complexity and the cost of outcome of the process. It is Only 19% of respondents
consultants required to deal therefore concerning that, when
with this’ as the most significant asked, only 19% of respondents
feel either a high degree
cause of additional cost in the feel a high degree of certainty of certainty (‘very high’
planning process (see Table 5). (‘very high’ or ‘quite high’) over the or ‘quite high’) over the
This is followed by ‘excessive outcome of planning applications outcome of planning
information requirements’, which (see Figure 8). A third feel they
can themselves result in added have low levels of certainty and just applications
complexity and consultancy fees. under half (48%) report a medium
There is no change in the ranking degree of certainty.
of these factors from last year. In the 2020 Planning for the Future
the rankings of causes of delay and The FMB urges the Government White Paper would provide small
cost we see a relatively high level to press ahead with its proposed house builders with the greater
of consistency over time. reforms to the planning system certainty they need to be able
designed to bring greater to bring forward more high
The cost of obtaining planning transparency, greater certainty quality, well-designed homes of
becomes more inhibitive for and greater speed to the process. the type that meet the aspirations
SMEs, the greater the degree of The direction of travel set out in of local people.
www.fmb.org.uk FMB House Builders‘ Survey 2021 17Developer contributions and viability
57% of respondents reported The Government announced its would help SMEs to better
that there are sites that they intention in the 2020 White Paper price-in contributions when
are interested in, but which are to replace Section 106 and CIL negotiating with landowners.
unviable due to likely Section 106, with a single ‘Infrastructure Levy’. Negative responses likely reflect
Community Infrastructure Levy Some of the details of this policy concerns that the total value of
(CIL) or other developer obligations remain undecided, but in this contributions from the smallest
(see Figure 9). One respondent survey we set out the key elements sites will increase significantly from
commented: of the policy, as currently known, their current level, as there is no
and asked respondents to assess proposed threshold to replace
33% of respondents cite the cost their impact on small site viability. the existing ten unit threshold for
of Section 106 agreements as a affordable housing obligations. It
major constraint on their ability The response to the proposed may also reflect concerns over the
to build, and the same number Infrastructure Levy policy is mixed possible impact on the viability of
cite the cost of CIL. It is therefore and evenly balanced (see Figure large numbers of more difficult or
vitally important that we get the 10). Respondents are slightly more atypical small sites.
system for assessing developer likely to view the impact on small
contributions right, so that the site viability as positive rather than The FMB is calling on the
cumulative impact on small site negative (42% vs 39%). But slightly Government to carefully
viability is not undermining the more respondents predict the calibrate the impact of the
SME house building sector. impact will be ‘very negative’ (16%) Infrastructure Levy on the
than ‘very positive’ (13%). viability on small sites, and to
consider applying a ten unit
“Currently all sites. Not enough Positive responses reflect feedback threshold to all or part of the
room for profits anymore. No from some SME house builders levy, in order to support the
longer looking to develop. Just
that a standardised approach viability of small sites and the
looking to do extensions now.”
to developer contributions SME house building sector.
Figure 9: Q. Are there sites
which you would otherwise be
interested in, but which you
believe would be unviable due
to likely Section 106, CIL or
other obligations?
57%
43%
Yes
No
18 FMB House Builders‘ Survey 2021 www.fmb.org.ukProject by Stonewood Builders Ltd
Figure 10: Q. On balance, what impact do you think these changes [existing proposals to replace S106
and CIL with a single Infrastructure Levy] are likely to have on the viability of small sites?
Very positve impact 13%
Slightly positive impact 29%
No impact 19% The response to
the proposed
Infrastructure Levy
Slightly negative impact 23%
policy is mixed and
evenly balanced
Very negative impact 16%
0% 5% 10% 15% 20% 25% 30% 35%
www.fmb.org.uk FMB House Builders‘ Survey 2021 19Workforce and skills
As we have already seen, a majority train many more new entrants, as
of respondents to this survey well as retaining and continuing
identified a shortage of skilled to upskill its existing workforce.
workers as being a major barrier to SME builders will need to play a
their ability to build more homes. central role in this, as we know that
This is not surprising, given the SMEs train 71% of all apprentices
evidence we have of mounting in construction, including the
skills shortages over recent majority of bricklayer apprentices. However, the construction industry
months, as demand has rebounded needs to redouble its efforts to
strongly from the pandemic. As typically happens in a recession, meet the serious skills challenge
last year’s survey showed the it faces, and policymakers need to
36% of respondents to this survey number of firms taking on support the ability of SMEs – who
are planning to grow their on- apprentices and offering other do most construction training
site workforce over the next year, training opportunities falling. This despite having least resources –
against just 7% who are planning year’s responses (which look back to lead this. The most effective
to decrease it (see Figure 11). over the past year to August 2020) means of support would be
This compares to 29% planning show some recovery in these enhanced employer incentive
to increase, and 11% planning to indicators. More firms say that they grants for SMEs training new
decrease, their workforce in the are employing apprentices (31%), apprentices. We also need to see
2020 survey. offering work experience (30%), increased efforts within colleges
training for new workers (26%) or and schools to signpost young
To meet these ambitions and tackle up-skilling existing workers (46%) people to the opportunities and
current and future skills shortages, than did last year. See Table 6 for rewards offered by careers in
the industry will need to recruit and full details. construction.
Figure 11: Q. Do you plan to alter the number of people working on your sites
(whether employed or subcontracting) over the year ahead, compared to a base
line of this time last year? 36% of respondents
to this survey are
planning to grow their
on-site workforce
Yes - we’ll be growing our workforce 36% over the next year,
against just 7% who
Yes - we’ll be decreasing the number of are planning to
people working on site 7%
decrease it
No - we’ll be keeping roughly the same
46%
number of people working for us
I don’t know 11%
0% 10% 20% 30% 40% 50% 60%
Table 6: Q. In the past year (since August 2020) has your company done any
of the following (tick all that apply)?
2021 2020
Employed one or more apprentices 31% 30% Colleges and schools
should do more
Provided work experience 30% 23%
to signpost young
Provided onsite training for new workers 26% 24% people to a career in
construction
Up-skilled current workers 46% 38%
None of the above 36% 31%
20 FMB House Builders‘ Survey 2021 www.fmb.org.ukA guide to
biodiversity
net gain
Global biodiversity is decreasing at authorities have already adopted Figure 12: Q. Are you aware of
a faster rate than ever before, and mandatory net gain policies. the Government’s intention
in the UK, 15% of species are now However, the Biodiversity Net to require house builders to
threatened with extinction. Loss of Gain (BNG) policy will require all demonstrate a biodiversity net
habitat through new development new developments in England – gain of 10% on all their sites?
can be one of many causes of this. with the exception of permitted
The FMB therefore understands the development and householder
importance placed on reversing applications – to achieve a 10%
this decline and supports the net gain in biodiversity. This
principle of the biodiversity net requirement will come into effect
gain policy being introduced in 2023, following a two-year
through the Environment Bill. transition period.
However, we also need to
Industry awareness 31%
recognise that SME builders will
face particular challenges in Just under one third of survey 69%
achieving biodiversity net gain respondents were aware of
on small sites, and especially this upcoming requirement.
small brownfield sites. Small As the legislation is yet to pass
brownfield sites can often be very and implementation is still over
rich in biodiversity, while on small two years away, this is perhaps
schemes there can be very limited not too surprising. However,
space for green infrastructure. it does underline the need for
Government and industry bodies
Yes
The Biodiversity Net to work together to make sure that
the industry is better aware of the No
Gain policy changes and has the information
Existing policy requires planners to and clarity it needs to meet these
identify and pursue opportunities requirements with minimum extra
for net gain and some local cost or delay.
www.fmb.org.uk FMB House Builders‘ Survey 2021 21How Biodiversity • The biodiversity gain plan will provide an objective, verifiable
need to contain an assessment measure. A simplified metric for
Net Gain will work of the value of habitats small sites (see below) is being
• A ‘general condition’ will before development and after produced by Natural England.
be applied to all planning development and show how a
permissions in England. 10% net gain will be achieved • This metric is focused on
The condition will require a in on-site biodiversity, or, if on- losses and gain to habitats that
biodiversity gain plan to be site gain cannot be achieved, support biodiversity. It does
submitted and approved by the through registered off-site gain not account for impacts on
local planning authority before or the purchase of biodiversity individual species, though this
development can commence. credits. could be incorporated into the
The Government has promised metric in future.
a simplified process for minor • These values will be calculated
development (sites of less than using a standardised • There will be no change to
10 units). biodiversity metric, intended to protections for designated
wildlife habitats, irreplaceable
habitats (such as ancient
woodland), or locally
designated sites.
• The Government has said
that there will be a targeted
exemption for brownfield sites
that would otherwise face
difficulties in delivering viable
development.
Industry concerns
Given the concerns of SME house
builders regarding cost, complexity
and delay in the planning process
already highlighted, it is not
surprising that a large number
of them fear that the BNG policy
could add to these (see Table
7). In addition, nearly half of
22 FMB House Builders‘ Survey 2021The Government has
promised to produce
appropriate guidance
for small developers
respondents fear that they will Further information
bear all or most of the cost of
meeting BNG requirements, and Natural England have published
that it will threaten the viability of a biodiversity Small Sites Metric. as well as guidance for planners
some brownfield sites. The former This is a beta version on which on treating such sites with due
suggests that the expectation feedback is being invited until 31 proportionality.
set out in the consultation, October 2021. The FMB would
that a consistent, standardised encourage all house builders In the meantime, the following may
requirement will enable additional to look at this and pass it on to be useful sources of information:
cost to be absorbed into land designers and relevant consultants
values, is not an expectation shared that they work with in order to • Partnership for Biodiversity in
by a lot of SME house builders. assess the implications for current Planning website
and future schemes, and to
It is clear that some of these feedback their thoughts. • Biodiversity Net Gain –
concerns the Government is Good practice principles for
attempting to address, for instance The Government has promised development, produced by
in allowing for a brownfield to produce appropriate guidance CIEEM, CIRIA and IEMA
exemption and a more streamlined for developers. It is important
process for smaller sites, but it that in doing so they produce • Biodiversity Net Gain –
is important in doing so that it clear, concise guidance aimed at Good practice principles for
consults closely with SME house enabling small scale developers development case studies,
builders in order to ensure that to meet the requirements with produced by CIEEM, CIRIA
these are effective in practice. minimal cost and complexity. and IEMA
Table 7: Q. What problems, if any, do you envisage this policy might have for your business (tick all that apply)?
It will add to the length of time it takes to get a permission and start building 53%
We will bear all or most of the cost of this 49%
It will threaten viability of some brownfield sites 43%
It will increase the cost of bringing forward planning applications 41%
I don't think it will be a problem 11%
FMB House Builders‘ Survey 2021 23About the Federation of Master Builders
The Federation of Master Builders (FMB) is the largest trade association
in the UK construction industry representing over 7,000 firms in
England, Scotland, Wales and Northern Ireland.
Established in 1941 to protect the interests of small and medium sized
(SME) construction firms, the FMB is independent and non-profit
making, lobbying for members’ interests at both the national and
local level. The FMB is a source of knowledge, professional advice and
support for its members, providing a range of modern and relevant
business building services to help them succeed. The FMB is committed
to raising quality in the construction industry and offers a free service to
consumers called ‘Find a Builder’.
For further information about the FMB, visit www.fmb.org.uk or follow
us on Twitter @fmbuilders. For further information about the FMB
House Builders’ Survey 2021, email publicaffairs@fmb.org.uk.
About Openreach
Openreach Limited, sponsors of the
FMB House Builders’ Survey 2021, runs
the UK’s digital network. We’re the
people who connect homes, schools,
hospitals, libraries, businesses - large
and small, broadcasters and governments
to the world.
It’s our mission to build the best possible
network with the highest quality of
service, and make sure that everyone in
the UK can be connected. We’re a
wholly owned subsidiary of BT Group
and our customers are the 650+
communications providers who sell
phone, broadband and Ethernet services
to homes and businesses.
www.openreach.com
@fmbuilders
@federationofmasterbuilders October 2021
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