The Federation of Master Builders has called on the government to help SMEs build more homes to meet rising demand as a result of Help to Buy.
Demand in the housing market has gone up since the introduction of the scheme, with mortgage approvals also increasing.
The FMB wants the government to ensure that small developers have access to business finance so that they can get projects off the ground.
It also wants a new emphasis on improving the supply to “smaller, easier-to-develop” sites, as well as reduced regulation and developer contributions.
FMB chief executive Brian Berry said: “The government is to be applauded for having worked hard to make [Help to Buy] more accessible to small builders and developers.
“In 1988 SME house builders built two thirds of new homes in the UK, but now that proportion has dropped to just one third. This trend has not been helped by the recent recession, the worst in living memory.
“To avoid any risk of the Help to Buy scheme creating a housing bubble, the Government now needs to increase the supply of land. It should also lift local authority borrowing caps to help build more social and affordable housing.”