Nearly two-thirds of SME housebuilders stall sites as viability pressure climbs to 82%, HBF finds

Nearly two-thirds of small and medium-sized housebuilders have delayed progressing a site or stopped work on site, according to the Home Builders Federation's (HBF) 2026/27 State of Play report, published in November 2026.

The seventh edition of the survey, produced by HBF with Close Brothers Property Finance and VELUX, found the share of SMEs citing cumulative viability pressures as a major barrier jumped from 64% last year to 82%, making it the second biggest barrier facing the sector.

Planning delays remained the top barrier for the sixth year running, cited by 88% of respondents, although that was down from 94% in the previous survey.

Neil Jefferson, chief executive of HBF, said in the foreword: "At a time when housing delivery needs to increase rapidly, giving small and medium-sized home builders the confidence to invest will be critical."

The findings

A total of 213 respondents completed the online survey between 2 June and 2 July 2026, with 59% building 50 homes or fewer a year. HBF said the survey was carried out before the Government announced its Your First Home equity loan scheme.

Some 99% of respondents said viability pressures were reducing their ability to deliver homes, with 70% saying significantly. Beyond the 63% who had delayed or stopped sites, 59% had cut the number of new sites acquired and 41% had made redundancies or reduced their contracted workforce.

Looking ahead, 41% expect to reduce the number of sites they bring forward over the next 12 months, 21% expect to exit certain markets and only 18% expect to expand.

Major barrier to growth	2025/26	2026/27
Planning delays or discharging conditions	94%	88%
Cumulative viability pressures	64%	82%
Lack of Government support for first-time buyers	58%	72%
Statutory consultee performance	63%	52%
Material supply and cost	41%	60%

Lack of resources in local authority planning departments was cited by 81% and an increasingly burdensome business taxation and regulatory environment by 72%. HBF estimates 2,660 additional planners are now needed across England and Wales, up from 2,200 a year earlier.

Phil Hooper, chief executive officer of Close Brothers Property Finance, said: "SME housebuilders tell us the numbers are no longer stacking up and they’re having to put sites on hold," adding that they were buying less land and cutting jobs.

Costs

HBF estimates that new policy requirements, taxes and other cost increases have added £76,000 on average to the cost of building each new home since 2020.

Trevor Smith, national housing development manager at VELUX, said in the foreword that 60% of SMEs described the supply and cost of materials as a major barrier, while 63% said material costs had increased significantly over the past year. VELUX replaced Travis Perkins as the report's third partner; the 2025/26 edition was produced with Travis Perkins.

On demand, 95% of respondents said buyer affordability was constraining sales. The report also criticises the Government's decision not to allow developers to make a payment in lieu of affordable housing on medium-sized sites.

Policy background

The Government's Your First Home page on GOV.UK sets out an equity loan worth 20% of the purchase price, interest free for five years, for first-time buyers of new-build homes in England with a minimum 2.5% deposit. Household income limits are £110,000 outside London and £140,000 within London, and £4.7bn of funding is available over five years.

Developer participation fees based on final sale price will apply, according to GOV.UK. HBF's press release says these start at 1% of the sale price, rising to 3% and then 4% on sales above 250 homes.

The foreword from Close Brothers Property Finance also welcomes the Government's biodiversity net gain (BNG) exemption for sites of 0.2 hectares or less. The Government's consultation response says it expects that exemption, announced in December 2025, to remove around 50% of residential planning permissions from mandatory BNG.

Mr Jefferson said in HBF's press release that the reality for SME developers remains challenging despite Government measures, and that delivering the increase in housing supply the Government wants to see will require a stronger focus on smaller builders beyond planning reform alone.

Last year's edition said SMEs believed they could lift output by 56%, or 35,000 homes a year, to 100,000 homes annually with the right support.

Your First Home is expected to open for applications in February 2027, with pre-registration before the end of 2026, according to GOV.UK.