SME housebuilders report widespread site delays

Nearly two-thirds of smaller housebuilders have delayed progressing development sites or put work on hold, according to new research showing that planning delays, rising costs, and deteriorating financial viability are restricting residential construction.

The 2026/27 State of Play report, produced by the Home Builders Federation, Close Brothers Property Finance, and VELUX, found that 63% of responding small and medium-sized housebuilders had delayed progressing a site or suspended work.

Almost all respondents, 99%, reported that viability pressures were reducing their ability to deliver new homes. Seven in ten said the pressures were having a significant effect, while 82% identified cumulative viability costs as a major barrier to growth, compared with 64% in the previous year's survey.

Planning delays remained the most frequently identified major obstacle, cited by 88% of respondents. The findings indicate that smaller developers are facing difficulties both in securing permission to build and in establishing commercially workable schemes after planning requirements have been assessed.

The research is based on 213 online survey responses collected between 2 June and 2 July 2026. Participants operated across England, Wales, and Scotland, with 59% building 50 homes or fewer annually.

The figures describe the experience of surveyed businesses rather than the total number of stalled construction sites. A company reporting that it has paused development activity may have delayed one or several projects, and the research does not establish the aggregate number of homes affected.

Nevertheless, the proportion of developers reporting delays provides an indication of the pressure affecting smaller residential construction businesses. Their projects depend on the availability of land, planning permission, finance, contractors, and sufficient expected revenue to justify committing capital.

The HBF estimates that higher construction costs, taxation, and regulatory requirements have added approximately £76,000 to the cost of delivering a new home compared with 2020. The estimate represents the federation's assessment of cumulative pressures rather than a fixed additional cost applying to every development.

Development viability is determined by the relationship between the expected value of completed homes and the expenditure required to construct them. Land acquisition, site preparation, infrastructure, professional fees, financing, and construction costs must be considered alongside planning obligations and other applicable requirements.

Higher costs can reduce the financial return available from a development even where demand for the proposed homes remains present. If the expected return falls below the level required by a developer or its funders, construction may be postponed while the scheme is reconsidered.

Land values cannot necessarily adjust immediately to compensate for rising costs. Sites acquired under earlier commercial assumptions may already have committed substantial capital, leaving developers with limited scope to change the original acquisition price.

Seventy-two per cent of survey respondents identified the assumption that land values can absorb unlimited policy and regulatory costs as a particular concern. Another 71% cited the cumulative effects of planning obligations, taxation, and regulation on development viability.

Those costs can arise at different stages of a project. Planning obligations may establish financial or infrastructure commitments before construction begins, while other costs emerge during site preparation, procurement, and delivery. Their combined effect determines whether the proposed development remains commercially achievable.

Financing pressures have compounded these difficulties. Forty-three per cent of surveyed developers had sought additional funding or refinancing during the preceding 12 months, reflecting the need to maintain access to capital while projects progressed through development.

Borrowing costs depend on the structure and duration of financing arrangements. Delays to planning decisions, construction programmes, or sales can extend the period during which a developer remains exposed to interest and other financial commitments.

The longer a site remains inactive, the greater the potential difference between its original financial assumptions and prevailing costs. Contractors' prices, labour availability, and materials expenditure may also need to be reassessed when a suspended project is prepared for construction.

Materials costs were identified as a major barrier by 60% of respondents, compared with 41% in the previous survey. Sixty-three per cent reported that construction materials had increased significantly in price during the preceding 12 months.

The movement of materials prices affects individual developments differently. Projects with agreed supply arrangements or secured subcontractor prices may face different exposure from schemes that have not yet entered procurement.

Buyer affordability was another substantial concern, with 95% of respondents reporting that it constrained demand for new homes. Weaker purchasing power affects expected sales revenues and the rate at which completed properties can be sold, influencing decisions about how quickly developers bring forward additional construction phases.

Against those pressures, 59% of surveyed businesses reported reducing the number of new development sites acquired. A further 67% said the availability of viable small and medium-sized sites had deteriorated over the preceding year.

Reducing land acquisition can limit financial exposure, but it also affects future construction activity. Developers completing existing schemes without acquiring replacement sites may experience a decline in their project pipeline, even where current construction programmes continue.

The impact has extended to employment. Forty-one per cent of responding businesses had made redundancies or reduced their contracted workforce, indicating that weaker development conditions were affecting the capacity available to undertake future construction work.

Residential projects require coordination between groundwork contractors, structural trades, roofing specialists, mechanical and electrical installers, and finishing subcontractors. Changes to the anticipated sequence of site starts can alter demand for those services, particularly among smaller contractors dependent on local housebuilding activity.

Development delays can also create difficulties when contractors become available at different times from those originally anticipated. Restarting a site may require new procurement arrangements, revised construction schedules, and confirmation that the necessary labour and equipment remain available.

The survey's forward indicators suggest further caution. Forty-one per cent of respondents expect to bring forward fewer development sites during the next 12 months, while 21% anticipate withdrawing from particular geographic markets or areas of development.

Only 18% expect to expand their operations. These are expectations reported by participating businesses, rather than confirmed future reductions in the number of sites entering construction.

The findings distinguish the availability of land with development potential from the ability to bring that land into productive use. Planning permission can establish the principle of development, but construction still depends on workable financial arrangements, sufficient demand, and the ability to secure contractors and materials.

With a substantial proportion of respondents reporting reduced land acquisition, workforce cuts, and delayed projects, the research points towards continued pressure on the pipeline of smaller residential developments. The extent of future construction activity will depend on whether developers can establish viable schemes under prevailing costs and financing conditions.