Brian Berry, Chief Executive of the FMB, says that the research recognises the value that small house builders can bring to the housing market regarding greater consumer choice and quality.

The UK has an unusual housing market structure compared to other developed nations, with a high reliance on a small number of volume house builders.

The Housing Minister, Mathew Pennycook MP, says he wants to diversify the housing market and restore the number of smaller house builders to the market, but many hurdles need to be overcome to achieve this aim.

He adds: “One of the most significant barriers is the failure of local authorities to allocate sufficient small sites for development in their Local Plans – something notably overlooked in the Government’s changes to the planning system announced last week.”

The research reveals that the housing market cannot be relied upon to readjust to deliver the SME housing output seen in the 1980s when they accounted for 40% of all new homes.

Berry notes: “Government intervention is needed for a more diverse housing market. This includes the introduction of government-backed low-interest loans and more affordable funding options. The research also highlights the current skills crisis calling for a greater focus on apprenticeships, training, and pathways for school leavers."

Christine Whitehead, Emeritus Professor of Housing Economics at the LSE and one of the report's authors, said: “SME house builders are equipped with unique skills and local expertise, with many wanting to expand their businesses.

“But to leverage their impact on the market, they must overcome barriers, many of which disproportionately impact smaller house builders compared to more prominent developers. SMEs can deliver high-quality products, and they reportedly want to play more of a role in greening homes and the self-build market, all of which offer growth opportunities.

“While smaller house builders clearly could play more of a role in the market by providing homes to match local need, boost the local economy and build upon unused land, to name a few, they are held back an environment that offers up too many barriers for growth”.