An additional 25,000 homes a year could be built if steps are taken to increase the level of output from SMEs, according to the Home Builders Federation (HBF).

In a new report, 'Reversing the decline of small housebuilders', the organisation has set out a range of proposals to address the finance, planning, and red tape barriers preventing smaller firms from helping to alleviate the housing crisis.

The number of SME builders has reduced by 80% over the past 25 years. However, by returning to the amount of small firms operating in 2007, a further 25,000 homes could be delivered each year.

The report states even with banks increasing their landing to SMEs, there has been little in the way of recovery since the 2008 financial crash. In addition, the planning permission process is also difficult for firms which do not possess the infrastructure and financial power to navigate it.

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While housing supply is now reached 200,000 homes a year, the majority of these are being delivered by the largest builders.

In the report's foreword, Redrow founder Steve Morgan said it "would be almost inconceivable today" to grow a smaller building firm into a larger building company.

Stewart Baseley executive chairman of the HBF, said if the Government wants to further boost output, it is "imperative" SME builders can "play their part".

"Whilst housing output has increased significantly in recent years, the vast majority of the increases have come from larger companies," he said.

"The number of smaller builders has collapsed over recent decades with few new entrants to the market able to grow to any size.

"Removing the barriers for SME builders could result in tens of thousands of desperately needed additional homes being built and boost economies up and down the country."

Recommendations in the report include;

• The creation of a new Help to Build scheme to help extend sustainable lending to smaller companies

• Tackling specific planning problems that disproportionately affect the business environment for SMEs, including the lack of smaller sites and the impact of pre-commencement conditions

• Lift barriers for builders to access tax incentives and other support enjoyed by SMEs in other sectors

• Provide technical and planning advice services for fledgling businesses

• Seize the opportunity of Brexit to reform EU regulation reducing the risk and complexity associated with building new homes

(LM)