England: Record number of small builders went bust in 2021 thanks to soaring material prices

That was a 75% increase on the year before, according to accountancy firm Price Bailey, which collected data from the Insolvency Service under a Freedom of Information Act request.

The cost of building a house has risen sharply in the last 18 months due to rising prices for steel, timber and plaster. A shortage of skilled staff also means that companies are having to shell out more money for bricklayers, plasterers and electricians.

Larger firms have been able to use their scale to profit from the boom in the market, which has pushed house prices to new highs. Persimmon and Vistry are still selling their houses more quickly than they were a in 2021, when the stamp duty holiday bolstered demand.

Price Bailey highlighted that smaller builders had been “disproportionately harmed” by a number of factors, including cost inflation and spiralling wages, The Times reports.

Matt Howard of Price Bailey said if the trend continues, the government’s target of building 300,000 new homes every year “looks increasingly unobtainable”.

He added: “Many housebuilders are tied into fixed-price contracts which quickly become under-priced as inflation eats away at margins. Larger builders with multiple sites can offset losses from underpriced developments, but small housebuilders with a single site may have no option but to deliver houses at a loss.”