The FMB Small House Builders’ Survey 2025 provides a comprehensive breakdown of the challenges facing small, local house builders and explores broader factors influencing the market.
Despite strong buyer demand, SME builders continue to face significant obstacles that threaten the Government’s ambition to deliver 1.5 million new homes.
Read the key findings from the survey below, or download the full report for more detailed insight.
Main constraints on supply
- Planning system remains the top barrier, cited by 47% of respondents.
- Material costs follow closely at 41%, reflecting ongoing inflationary pressures.
- Land availability is a persistent issue: 33% report a lack of available sites, and 31% say much of the land accessible is financially unviable.
- Costs of national regulations, Community Infrastructure Levy (CIL), and Section 106 agreements (all around 31%) continue to impede viability.
- Two-thirds (67%) of SME builders say sites of interest are unviable due to anticipated Section 106 or CIL obligations.
Planning application process
- Top causes of delay:
- Information requirements (80%)
- Section 106 negotiation (75%)
- Under-resourced planning departments (75%)
- Additional costs stem from:
- Complexity and expense of hiring consultants (82%)
- Prolonged delays (76%)
- Extra reports (flood risk, air quality, acoustic) (73%)
- Certainty in planning outcomes is moderately high: 64% report a high degree of certainty, with London builders most confident.
Small sites and land availability
- 50% of builders predominantly build on brownfield land; 34% target Green Belt sites.
- 40% believe planners are taking small sites more seriously, but 37% say the process for obtaining planning is worsening.
- 65% agree the National Planning Policy Framework (NPPF) is driving more opportunities for small sites.
Buyer demand
- 73% of builders anticipate strong buyer demand in the year ahead.
- Optimism is highest among those with positive lending conditions (97%).
Access to finance
- Most significant finance-related issues:
- Interest rates on new loans (70%)
- Fees on new/existing loans (63%)
- Primary funding sources:
- Private equity (49%)
- High street banks (44%)
- Homes England schemes (38%)
- Finance brokers (38%)
Costs
- 91% report that building homes has become more expensive over the past year.
- 53% saw cost increases of 30–50%
- 45% reported increases of up to 20%
- Regional disparities are stark: North England is hardest hit, with 73% reporting 30–50% increases.
Workforce and skills
- Since August 2024:
- 56% hired apprentices
- 54% provided work experience
- 53% offered on-site training
- Barriers to apprenticeships: quality concerns (51%), cost (39%), dropout risk (39%), admin burden (34%).
- 53% struggle to hire enough site-based staff.
- 69% plan to grow their workforce in the coming year
Future outlook
Builders remain optimistic about growth despite operational challenges. 68% believe Government planning reforms can help diversify the market and boost the number of smaller developers.
