Throughout the year, LSE London is holding round tables for their new project, “Accelerating Housing Production in London”. There is a small group of experts in the private sector and academia gathered who used to discuss the challenges facing by the small, medium-sized builders and developers (SMEs) in the London residential market.
Following are the questions that are framed around the table in Inhabit homes:
Can SME play a vital role in London?
Most of the people agreed that SMEs could play a bigger role than they do. There was agreement that “London is too damn difficult”. People used to emphasize a statement that smaller London based builders were actually working outside the capital such as Cambridge.
There was also a discussion of what constituted small-
1.The issue for a builder who develops couple of homes a year
2.Which could often be in the form of custom build on the owner’s land
3.There were some people who need pipelines of small sites with the planning permission.
Following are the number of barriers-
1.The first is that SMEs often have problems in identifying and purchasing appropriate developing sites, as gaining access to the parcels of land in London which requires large amount of upfront capital as well as considerable time, knowledge.
2.If they are successful in the purchase of land for development, SMEs face barriers in meeting the costs associated with planning consent.
3.Within the local authorities, the skill and resources that are not just the part of planning development but also a part of surveyors, valuers and the legal department which is highly stretched.
4.The local authorises requires to take positive action to bring the forward packages of small sites and can make them available to the smaller builders which can facilitate on windfall sites.
5.After receiving planning permission, finance is still a major issue. They have to negotiate with the banks whenever they start a site.
What about SMEs on large sites? Is there a place for SMEs in custom build?
In central London, development mainly depends on the large sites, but in the main, small builders would rather be in charge of small sites than to operate on a part of a large site.
Developers who are specialised with strong brands and has clear concepts fared far better than generalists SMEs. There is a reputation effect of being known for a particular niche product.