We need to save SMEs

One of the biggest problems in the housebuilding industry is we're missing a huge subsection of the market. We have large developers at the top and some small niche specialists at the bottom. However, the middle, typically full of SMEs, lacks numbers. It's one of the biggest failings in the construction industry that it is so hard for small and medium size enterprises to survive. We want to have a look here, then if you want help designing residential architecture in London, we've got you.

Tradition

At one point the UK had a thriving market for SMEs. They were responsible for building close to 40% of housing. However, over time it has become harder for them to survive. Today the remaining businesses are responsible for just 10% of homes.

The situation in the UK is in stark contrast to successful housebuilding countries in Europe. Germany is the perfect example. There are hundreds of thousands of SMEs in their construction industry, employing a huge number of people. The focus on small and medium size businesses provides more flexibility and competition.

Problems

There are a few major issues that make it really difficult for construction SMEs in the UK at the moment. Firstly is the fact that large developers can benefit from economies of scale. They can negotiate better rates from various suppliers and reduce the unit cost of properties. Smaller companies can't do that, so end up with higher costs and restrained profits.

The situation gets worse when you factor in other things like infrastructure levies and taxes. It means again SMEs are at a disadvantage as they don't have the economies of scale. Ask us about residential architecture in London.

The complexity of the tendering process for social housing developments can cause issues too. It can create barriers for SMEs. The problem is the agreements for many of these projects are similar to large contracts, rather than scaling to suit the size of the site. As a result, it can actually exclude smaller local contractors from even applying.

How to fix the situation?

What we need to do is work to give SMEs more support and easier access to projects, especially those smaller local infill projects. These are the companies with the best knowledge of their local areas and what to expect. They generally already have relationships with local suppliers. So, it can provide massive benefits to work with them. Reforming procurement could be a big help.

An interesting thing to look at is the actual designs for sites. As a top name for residential architecture in London, we know the value of bespoke design. However, if we want rapid delivery of high quality housing, the focus should be on buildability. Complex designs that require specialist contractors and materials create issues for SMEs. They may only be deliverable by large companies.

A bigger change should be ensuring infrastructure levies are proportionate to match the size of sites. Even allowing payment in more instalments could have a big impact, easing cash flow for SMEs.

It could also be a big help to look at tax reliefs for SMEs that can take on smaller projects like Brownfield redevelopment in their local areas. It would have a big impact, allowing more developments to get off the ground.

Ultimately, the goal should be to ensure local SMEs have better support and conditions that allow them to compete. It could provide massive benefits. Crucially, doing this also means you support companies who will still be in the area after projects are complete. It can provide big advantages in terms of ongoing maintenance. Better maintained properties will be more sustainable and last longer.

Talk to us about residential architecture in London

One of the big benefits of working with us is we have the flexibility to work with all kinds of contractors. It could be big names or local specialists. We can factor this in when we look at the designs. The goal is to ensure buildability while also maximising the quality.

Coffey Residential has a wonderful record for creating exceptional homes. We can work on any scale and with any kind of requirements. Even better, we can overcome all kinds of local challenges, including sites with tricky access requirements. When it comes to residential architecture in London, we always achieve high standards. So, get in touch today and let's discuss your plans.