The latest figures show that 343 housebuilders went bust in the last 12 months to September, compared to 272 in 2017-18.

This marks a 67% increase since 2015 when 205 residential construction companies collapsed.  

Paul Pittman, partner at Price Bailey, said: ‘Subdued activity in London and the south east and falling prices as people defer purchases due to Brexit uncertainty have all taken their toll on the smaller housebuilders.’

Price Bailey says that while listed housebuilders have performed better over the last few years, smaller developers in particular have been squeezed by a number of factors, including stagnant house prices in London and the south east, and rising material and labour costs.

The depreciation of the pound has pushed up prices of raw materials and the exodus of east European workers has contributed to high wage inflation.

Pittman said: ‘While the number of new houses being built is at an 11-year high and profit margins have doubled over the same period, SME housebuilders have struggled.’

Alongside the increase in the number of new houses, housing transactions across the UK increased by 14% from 268,400 in the second quarter in 2019 to 305,100 in the third quarter in 2019, according to the quarterly stamp duty land tax statistics. This is a similar increase to the previous year.

Pittman added: ‘Large housebuilders have been buoyed by rising house prices, low interest rates, a competitive mortgage market and government subsidy in the form of the Help to Buy scheme.

‘Smaller housebuilders do not benefit from the same economies of scale as the larger builders.’

Newcourt Residential, for example, collapsed in mid August after it ran into cashflow difficulties and FRP Advisory was called in to handle the administration. The developer primarily built multimillion pound mansions around Weybridge in Surrey.

Newcourt Residential owed £45.5m to creditors at the time of its administration, the majority of this was for loans from Oaknorth Bank valued at £41.4m, according to the administrator’s report on Companies House. Oaknorth specialises in loans to SMEs for property.

Oaknorth Bank provided lending across the group, including to Newcourt Residential Wadhurst Limited (NRWL). The bank held cross guarantees and each company within the group except Newcourt Construction Limited, was indebted to Oaknorth Bank for £41,414,267.

The government has taken some steps to support smaller builders through the state-owned British Business Bank, which launched the Enable Build scheme in May, making up to £1bn of guarantees available to banks that lend to small builders.

This will reduce the amount of capital banks are required to hold against small builder finance.

Pittman said: ‘While the initiative taken by the British Business Bank is welcome, small housebuilders still face significant obstacles. Public sector bodies could do more to work with small builders so that small plots of land can be identified, developed and quickly brought to market.

‘The government could also do more to de-risk the planning process and remove much of the cost and uncertainty around developing smaller plots of land.’