finance & insurance 43
Funding SME builders is key in solving the housing shortage
With housebuilding a key feature in the general election, Hampshire Trust Bank’s Robert Grigg, managing director (Property Finance), looks at how increased finance options for small developers will help increase their growth and ability to build new properties
and some action is being taken to increase the number of new builds, it is clear that more needs to be done and small to medium-sized enterprise (SME) housebuilders and developers have a crucial role to play in filling the gap. Despite this, decades of market concentration
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has reduced the choice available to this impor- tant sector, resulting in SME housebuilders and developers continuing to face a number of barri- ers in accessing the finance and capital required for growth. Research from the NHBC Foundation,
released in October 2014, indicates that there has been a significant decline in the number of small firms active in housebuilding in recent years, with
s we are all aware, the UK is experienc- ing a chronic housing shortage. While housing is high on the political agenda
numbers halving between 2007 and 2013. Of the 500 small housebuilders and developers the NHBC contacted as part of its report Small builders face serious barriers to growth, 22 per cent said that securing suitable finance for projects was a major challenge. Enter the specialist challenger bank, a refresh-
ing alternative equipped to offer an approach and enthusiasm to lending that provides SMEs with the access to the finance they need to support their business, drive growth and realise their ambitions. Crucially, the emergence and success of new
entrants to the finance market is also helping foster competition and improve choice for SME builders and developers. Specialist challenger banks will not typically offer a current account but instead will focus on
specialised lending products in sectors such as property, asset and commercial finance, designed to meet the precise needs of customers and underpinned by responsive customer service from expert staff. SME housebuilders need to work in partner-
ship with a bank that’s willing to take the time to understand the risks and rewards of a particular site, understands the property finance market and speaks the same language as its customers. It is important to work with an experienced team, for instance, a team that offers skills that extend beyond funding solutions to site acquisitions, marketing and surveying.
“SME housebuilders need to work in partnership with a bank that’s willing to take the time to understand the risks and rewards of a particular site, understands the property finance market and speaks the same language as its customers. It is important to work with an experienced team”
Smaller housebuilding companies work
to tight timeframes, they need to move quickly as waiting around for a lending decision means they risk losing out on a development opportunity. Finance providers need to be flexi- ble to ensure customers do not miss out on the right opportunities. The Home Builders Federation (HBF) states
in its report The Economic Footprint of UK Housebuilding, released in March 2015, that about 140,000 new homes were built in the UK last year, a shortfall of about 100,000 on the numbers required. In order to achieve this increase, all sectors of the industry, from the smallest to the largest housebuilders, will have to increase the scale of activity.
Continued overleaf... respond online at
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