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08/11/2017

Small builders call for better access to finance

Words: Laura Edgar
Land transaction tax / Shutterstock_195196565

The Federation of Master Builders (FMB) has urged chancellor Philip Hammond to take ‘bold action’ in this month’s Budget to improve access to finance for SME builders.

Such a measure would help to tackle the housing crisis, said the trade association.

Brian Berry, chief executive of the FMB, said: “If the government wants to solve the housing crisis, it must address the access to finance issue that local housebuilders continue to face. The chancellor needs to commit to underwriting loans from banks to small housebuilders to get finance flowing into our sector once more. Nearly a decade after the financial crisis, difficulty in accessing finance remains a major barrier to small housebuilders increasing their delivery of new homes.”

FMB’s 2017 House Builders’ Survey, Berry noted, suggested there has been “little sign” of improvement on this issue, instead suggesting “slight deterioration in lending conditions”.

These difficulties make it harder for existing SME housebuilders to grow and deter new firms from entering the market, resulting in a less dynamic housebuilding sector that is less able to expand to build the homes we need, he said.

“If local housebuilders are to build Britain out of the housing crisis, the chancellor must use the Budget to pull as many levers as possible in order to enable more finance to reach SMEs. One thing the government can do is act to reduce the capital costs of lending to this sector for smaller specialist lenders. The initiative announced last week by the British Business Bank to extend its ENABLE Guarantee to housebuilding by striking a deal with United Trust Bank is welcome. This type of government action, because it pushes down the capital costs of lending to SME builders, will allow lenders to do much more of this.”

Berry urged the chancellor to back this initiative, encourage its expansion and explore all other options to reduce the risk and costs to banks of lending into this sector, in order to meet the housing need.

On Monday, the RTPI called on Hammond to use the Budget to announce “substantial actions” to tackle the housing crisis.

The institute’s chief executive Trudi Elliott said that although the housing crisis can feel “insurmountable”, there has been progress in some areas.

“There is a new atmosphere of urgency around housing. The Grenfell tragedy has brought new attention to social housing. Housing was also at the centre of the recent party conferences. Now we need substantial actions to follow this interest.

“We hope to see major proposals in the Budget – anything less will not be enough to address this crisis.”


Read more:

Lack of small sites a top barrier to new homes – survey

RTPI calls for action on housing


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