Small and medium-sized home builders across the UK are warning that the current tax and regulatory environment is exacerbating the housing shortage, with 97% saying it’s holding back business growth. However, if these barriers are addressed, SME builders could boost the supply of new homes.
The findings in the State of Play report 2025/26, produced by Close Brothers Property Finance, the Home Builders Federation (HBF) and Travis Perkins, highlight the real pressures facing SME home builders, from rising costs and increasing complexity to ongoing planning delays. Confidence among home builders has fallen, with almost nine out of 10 SMEs less optimistic than they were prior to the General Election.
The report found that financial issues were a big barrier, with 64% citing cumulative viability pressures and 58% citing difficulties obtaining offers for S106 Affordable Homes. Regulatory and political challenges also remain significant, with 66% reporting local or political opposition and 54% noting the Building Safety Levy is causing issues.
Yet, with the right policy support, SMEs believe they could increase housing delivery by 56% a year on average – equivalent to an extra 35,000 homes annually. This would increase the contribution delivered by SME home builders to a total of 100,000 homes a year.
Neil Jefferson, Chief Executive of the HBF, says: “Without real change, SME home builders will remain at a disadvantage...undermining the Government’s ambition to create a diverse, competitive and resilient housing market.”