With the number of new homes being built across the UK still significantly below the level needed to meet demand, compounding the country’s housing crisis, LendInvest is calling on the government to do more to remove serious barriers to growth for small housebuilders, with planning, access to finance and land availability often highlighted as the biggest challenges. 

Residential property developers have in the past been accused by some housing commentators of sitting on land with planning permission for new homes and not building because they are waiting for it to accumulate in value. But the online mortgage lender says that talk is cheap and insists that more needs to be done to help alleviate the challenges and obstacles facing property development SMEs, as many genuinely do want to significantly increase the supply of much needed new build homes nationwide.

Recent decades have seen the numbers of SME housebuilders fall sharply. In 1988, the number of small builders, which is defined as those building 100 units or fewer, stood at 12,200 in the UK. This fell to 5,700 by 2006 and then 2,400 by 2014.

In its submission to the Communities & Local Government Committee’s Inquiry into capacity in the homebuilding industry, LendInvest argues that “the government has a real opportunity to reinvigorate the market by putting homebuilding front and centre of its industrial policy.

“It is not enough, however, to set ambitious housebuilding targets without addressing the challenges in the sector that are preventing developers from delivering the targets that the government aspires to achieve. Instead, measures should be taken to address the shortages in land, opportunities for finance and the lack of skills in the sector to truly get Britain building.”

LendInvest sets out the following recommendations to boost the numbers of small-scale builders in the UK, and so begin to address the housing shortage:

Land

+ The government should take action to ensure that land is not unnecessarily banked and that larger developers who do not develop land in their stock sell it on to SMEs who will develop the land swiftly.

+ Place increased scrutiny on the land market, including requiring the publication of data on land pricing, option agreements and ownership.

+Prioritise SMEs over major housebuilders in bids to develop land released from public ownership.

 Finance

+ The government should explore state-backed funding schemes to provide businesses like LendInvest with more capital to lend to SMEs.

+ Put SME property development at the heart of the industrial strategy. Commit to and act upon the funding understood by industry to have been earmarked by government for SME development projects.

+ Build on the government’s support for alternative finance as a route for SME growth by promoting cross-fertilisation between small scale developers and alternative finance companies.

Skills

+ The government should support industry initiatives to develop skills for property developers.

+ The Industrial Strategy should go further in incentivising development activity to position property development as an attractive entrepreneurial opportunity.

+ Government at all levels must work with SME developers to make it easy to plan and develop property.