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Britain is too dependent on large home builders

As Britain’s housing crisis shows no sign of improvement and housing minister Gavin Barwell’s housing white paper sets out ‘small adjustments’, contractors face rising scaffolding costs.

Britain’s chronic lack of housing will not be solved with ‘a silver bullet’ but a lot of small adjustments, according to housing minister, Gavin Barwell. His long-awaited housing white paper, has been published following his recent announcement that we were too dependent on a small number of large home builders, and that a shake-up was required.

Small adjustments

The housing white paper, titled “fixing our broken housing market” is separated into four key aspects including planning more homes in the right places, building the new homes we need, diversifying the market and helping people now.

However, it’s the diversification of the market that contractors will be focusing on, identifying that the house building market is constrained due to “insufficient competition and innovation.”

Mr Barwell went on to set out his plan to diversify the market to achieve the amount, quality and choice of housing people want. This is to be achieved by “supporting new and different providers, more innovation in methods of construction and supporting new investors into residential development.”

The Government has pledged to:

  • Back small and medium-sized builders to grow, including through the Home Building Fund
  • Support custom-build homes with greater access to land and finance, giving more people more choice over the design of their home
  • Bring in new contractors through our Accelerated Construction programme that can build homes more quickly than traditional builders
  • Encourage more institutional investors into housing, including for building more homes for private rent, and encourage family-friendly tenancies
  • Support housing associations and local authorities to build more homes
  • Ensure the public sector plays its part, by encouraging and making possible more building by councils and changing the way the Homes and Communities Agency operates
  • Boost productivity and innovation by encouraging modern methods of construction in house building

 

House builders aren’t smiling at price hikes

Although contractors will be pleased with the support being given to SME house builders, the challenge of rising costs due to the devalued pound remains a large concern. In fact, the smile in this illustration is certainly not how contractors will feel about the imminent price rises for scaffolding in 2017.

Graph showing rising prices of scaffolding in 2017

Source: TRADINGECONOMICS.COM

According to the industry magazine scaffmag.com, “The 16% post-Brexit fall in the Pound against the Dollar and Euro has also made things worse for UK scaffolders. As raw materials are priced in Dollars and Euros this has raised the cost of raw materials and made imported scaffolding products more expensive to buy.

“Scaffolding manufacturers have started to pass on the costs and UK suppliers are reporting their wholesale prices for a foot of tube has risen by over 60% since March this year.”

Contractors choose to lease scaffolding

In January’s edition of Insight London, we covered the many rising costs for businesses and the concept of using leasing services to ease the pressure. Contractors are also turning to leasing to ease their increasing scaffolding costs, opting for fixed monthly payments, which provides the opportunity to see a return on investment before the scaffolding is paid in full.

Carl Cartwright, National Account Manager, Shire Leasing commented: “The house building industry is under a tremendous amount of pressure at present and business owners are looking for new and different ways to manage their cost base. Leasing is ideal for this sector, offering a fixed monthly payment, and it’s often more beneficial than renting.”

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Summary

As Britain’s housing crisis shows no sign of improvement and housing minister Gavin Barwell’s housing white paper sets out ‘small adjustments’, contractors face rising scaffolding costs. House builders look at new and different ways to manage their cost base – identifying leasing as more beneficial than renting.

Final Word

If you found the above article useful why not download the Second Edition of my guide 'Insight London'. For any business, research provides context and gives clear direction. Which is why 'Insight London' exists; to provide you with further research, insight and anecdote that you can take away and implement in your own businesses. 

Get the Second Edition of ‘London Insight’ which will give you the key news and views from an SME’s perspective and much more.

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About Author

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Carl Cartwright

As someone with over 15 years of experience in the leasing and finance industry, Carl has assisted businesses to succeed efficiently through leasing. With a particular knowledge and interest in the London area, Carl is keen to assist new and current SMEs to exceed established goals.

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