It’s no secret that the housing crisis in the UK is one that has been getting progressively worse for a number of years, with the Prime Minister stating that it was her personal mission to ‘fix’ the situation towards the end of last year.
At present, the building of new houses in the UK is controlled by a handful of large developers, with the number of SME housebuilders declining by around 80%.
It wasn’t always like this. Back in the 60s the top 10 housebuilders only accounted for 9 percent of new housing production. The rest was supplied by small, often family-led businesses.
The shift in the building of new homes has often been accredited to the difficulties associated with obtaining finance, with 54% of SMEs claiming that a lack of funding was the obstacle that stood in the way of getting the work done.
Alternative finance is, however, beginning to plug this gap and offer a resolution to SMEs that would otherwise struggle to complete building projects.
Providers of alternative sources of finance have been establishing their position in the SME property value chain, and it’s not hard to see why.
This type of finance tends to be uninhibited by things such as legacy loan books, outdated and lengthy technology processes and regulatory constraint, making it much more attainable for smaller businesses who can’t obtain the funds that they need through banks.
Despite these progressions, there are still a number of changes that the Government could implement that would further support the work of small building businesses.
Reintroducing the pre-1990 presumption in favour of development, particularly for small brownfield sites that lie within existing settlements would certainly help.
Doing so would help to unlock areas of unused land for SMEs while simultaneously protecting the greenbelt and undeveloped areas.
Areas suffering from significant housing shortages would benefit if the reclassification of garden land to “greenfield” land was reversed. This was a lifeline that many small businesses previously relied on to stay in business.
It seems that the presence of the Government’s Help-To-Buy scheme has done plenty to boost the demand for houses, just not the supply. Perhaps now is the time for a Help-To-Build scheme to also be implemented…
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