“Perfect storm of costs” to hit SME housebuilders

Half of Britain’s 2,500 smaller housebuilders could crash into insolvency by the end of this parliament as a result of the cost of industry regulations, a report has warned.

The bleak forecast is the main conclusion of a report produced jointly by the public affairs firm WPI Strategy and ChamberlainWalker, an economics consultancy specialising in housing and planning.  It refers to "a perfect storm of costs" that threatens to wipe out the profits of SME housebuilders.

The report warns that at the current rate of failure among SME builders, as many as 75,000 fewer homes would be built by smaller housebuilders before the next general election is due to be held in 2029.

It says that recently introduced regulations such as the Building Safety Levy have added close to £5bn of annual costs to housebuilders.

Labour and materials costs are also rising, while house prices have flatlined, adding to the pressure on the industry, with smaller players disproportionately affected, the report adds.