The Future of SME Builders in England

A new report from WPI Strategy finds that half the SME builders operating in England are at risk of financial collapse by the end of this parliament.  

This is due to a ‘perfect storm’ of rising costs and additional regulation imposed on the sector by the previous Conservative Government.

The new analysis, authored independently for by WPI Strategy by a former MHCLG economist, says that regulations imposed by the previous administration are now costing the housing sector around £4.8 billion a year.

While the handful of very large “volume developers” that deliver a bulk of our housing can absorb these costs, many smaller and medium-sized builders, which typically operate on less than half the volume builders’ profit margins, are facing a financial crisis.

SME builders are defined as typically delivering fewer than 2,000 homes annually. Their number has already collapsed from over 12,000 in the 1980s to around 2,500 today. The ex-MHCLG author of this report, Chris Walker, expects from his analysis that around half of all these businesses will be at risk insolvency by 2029. This could mean up to 75,000 fewer homes being built over the parliament by SMEs.

This report was commissioned to mark the launch of WPI’s Built Environment Unit.

Download the full report here