Helping smaller developers back into the market

The UK's big housebuilders seem to be in the midst of a boom, with Persimmon recently posting its highest ever profits (£1.1bn) and the salaries and bonuses of senior management now as newsworthy as those of the banking industry. Although last year there were 200,000 new homes built in the UK, the highest level for a decade, the housebuilding market has become increasingly dominated by the big players. 

The Economist this week has highlighted that half the homes built in the early 1980's were built by small developers; this figure has now shrunk to around a tenth. Those building less than 100 homes a year have been squeezed out of the market at a time when homes need to be delivered as quickly and efficiently as ever. A monopoly seems to be emerging with the housing market being dominated by a few big players. These are the firms that, as The Economist points out, are more able to manage the increasingly complex demands that today's planning system places on housebuilders. They hold all the power in the market; where there used to be 5 or 6 bidders for a site it is now more likely to only be 1 or 2. 

Smaller developers need to be able to continue to compete in the housebuilding industry to help speed up delivery of homes, maintain competition in the land market as well as bring greater diversity in the architecture of new developments. The Economist suggest that the government needs to lower the barriers to entry but does highlight that Transport for London are exploring selling their developable land off as smaller plots, making them more viable for small builders. 

Here at Context we can take on the risk of getting a site through to sale stage by both funding and managing the planning process. For a smaller developer the costs of planning expertise and, at times, the complexity and sheer length of the process can be prohibitive. Context can remove this risk, only requiring a share of the proceeds from a sale.