The decision strikes down exemptions from affordable housing contributions for small developments.
Chief Executive of the FMB, Brian Berry, said the ruling threatens to increase the housing crisis by 'casting a dark cloud' on small local builders at the time when these firms are beginning to show signs of growth.
Mr Berry said: "This decision comes just at the point at which more and more sites are being subject to Community Infrastructure Levy (CIL) charges. Taken together, this will push up demands on small house builders to unprecedented levels.
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"Up until only a few years ago, planning guidance contained a national indicative minimum site size threshold of 15 dwellings for affordable contributions. As such, the Government's decision last year to move back to a ten unit threshold is hardly an unreasonable step.
"Rather it recognised that the small firms which invariably build out small developments have proportionately higher costs and do not necessarily have the muscle or inclination to challenge local authority demands for affordable housing.
"The likely response is that they will avoid attempting to build on certain sites full stop and because of this, there will be less homes of all description."
Mr Berry continued, urging the Government to stand its ground on the principle of the ten unit threshold.
He added: "It could seek to address reasonable concerns which some local authorities have – for instance, there could be some flexibility allowed to local authorities with a very high proportion of small sites.
"However, the Government should strongly defend the principle of the exemption – it is not appropriate to impose the same level of obligations applied to large multi-million pound developments to the smallest of developments being brought forward by the smallest firms."
(LM)
