Excessive red tape, unfavourable lending terms and the increased competition they face from large, multinational construction companies are fuelling this reduction. We are living in the midst of a housing crisis, where the availability of affordable housing is constantly diminishing, so the decline of small-to-medium housebuilders is not just a problem for those companies – the social and economic consequences of this issue are far-reaching.

The former housing secretary stated his support for SME developers, pledging them funds and promising to reform the swollen and inefficient planning system – but these changes have been placed on indefinite hold since the recent cabinet reshuffle. What, then, can these small housebuilders do to stay competitive in such an unforgiving market?

These smaller players will struggle to compete with their larger competitors by playing them at their own game – a willingness to stay ahead of the curve and embrace smarter, tech-based operational strategies could be key in reversing their decline and standing out in today’s crowded market.

Seeking untapped opportunities

As mentioned, the troublesome red tape and frequent delays associated with our current outdated planning system are a serious disadvantage to smaller housebuilders. The increasing complexity, unpredictability and inconsistencies within the planning process can be a bitter blow to the operations of smaller businesses, as opposed to larger players in the market with greater resources to absorb the costly impact of delays.

One potential solution, often overlooked in the industry, is for smaller players to tap into the potential of permitted development rights (PDRs), which are a Government-introduced initiative to reduce the stasis of the planning system.

PDRs enable developers and property investors to carry out conversions, extensions, and changes of use to existing properties without the need for formal planning permission, only requiring prior approval from the Local Planning Authority.

By integrating technology-driven strategies, smaller businesses will find it easier to streamline planning application processes and identify viable opportunities in the market.

For example, our Class MA permitted development tool has identified over 27,599 brownfield sites that could be developed into residences with prior approval from the Local Planning Authority (LPA).

Smaller housebuilders may be able to stack the odds in their own favour by using all the tools at their disposal to move faster than the market around them.

Placing data first

The transformative power of big data has been heralded as a game-changer for businesses across a myriad of businesses. Companies that implement a data-driven strategy will not only improve their operational efficiency and reduce the drain on resources, they will also have greater capacity to identify undervalued targets that can offer key advantages against their competition.

Adopting data-driven strategies when sourcing development sites can make all the difference for SME developers, and also bring forward the development of much-needed housing in neighbourhoods around the country by recycling off-market pockets of space and putting them to better use. In this way, everybody stands to benefit.

For example, data can be key in helping smaller firms anticipate and respond to evolving market trends and shifts in buyers’ preferences. With the make-up of cities undergoing profound changes in the wake of the pandemic, SMEs are ideally placed to identify opportunities in the market and capitalise on the changing dynamics between commercial, office space and residential buildings. A strategic use of data can prove invaluable to smaller housebuilders to seek out opportunities to convert unutilised premises to suit the current needs of buyers and investors.

No panacea

These strategies that I have suggested above do not necessarily represent a silver bullet for reversing the decline of the small housebuilder – but they do show that there is hope. Their smaller size can be turned to their advantage by harnessing the value of tech-driven strategies and using that newfound agility to identify overlooked opportunities and carve their space in the market.