In the world of property development, a stark and concerning trend has emerged: lending to small and medium-sized housebuilders has been in sharp decline. According to a recent analysis, bank lending to these crucial businesses has plummeted by 49% since 2017. This isn’t just a financial footnote; it’s a symptom of a much larger, systemic breakdown in how we build homes in the UK.

The widely cited UK housing crisis won’t be solved by a single policy or a single actor. It requires a “whole solution”—a holistic approach that tackles the interconnected failures across the entire development process. Lenders cannot be expected to deliver up finance in a highly technical industry that has been hollowed out and made inaccessible to all but the largest, most established housebuilders. This is a problem that spans the entire lifecycle of a development, from concept to completion.

The Interconnected Problems

• Land: The journey to building a home starts with land. The shortage of viable, shovel-ready sites is a persistent issue. Despite a focus on brownfield sites, many require significant and costly remediation, and are not a quick fix.

• Planning: The planning system remains a major bottleneck. A lack of resourced and skilled planning departments leads to significant delays and uncertainty, making it difficult for smaller developers to invest the time and capital required.

• Finance: As the lending figures show, securing finance is a monumental hurdle for small developers. Post-2008 regulations have tightened lending criteria, making it easier for large corporations to secure capital while starving the smaller, agile firms that often provide local, bespoke development.

• Apprentices: The industry faces a skills gap, with a shortage of qualified tradespeople and a pipeline of talent that is struggling to keep pace with demand. Without a strong apprenticeship and training system, even with land and finance, the homes simply cannot be built.

• Legal: The legal framework, particularly around planning and land acquisition, can be complex and slow. Simplifying this process is essential to reduce risk and speed up delivery.

• Infrastructure: New developments require a foundation of supporting infrastructure—roads, schools, GP surgeries, and utilities. The lack of coordinated planning and funding for this infrastructure often causes significant delays and community opposition.

• Valuation & Marketing: Even once built, bringing a home to market requires a robust valuation and marketing process that understands and reaches the right buyers. For smaller builders, this can be an additional challenge without the scale and resources of the larger firms.

The decline in lending to small builders is not an isolated issue; it is a direct consequence of a system that has been gradually made too complex, too risky, and too costly for them to operate in. To genuinely “get Britain building,” we need more than just targets and rhetoric. We need a fundamental rethink that addresses all these issues in concert. This means finding innovative solutions for land assembly, streamlining planning, creating new pathways for development finance, and investing in the skills and infrastructure needed to build a vibrant and diverse housing market for everyone.