6 INDUSTRY NEWS
PM promises ‘Generation Buy’ with 95pc mortgages
Last month PM Boris Johnson promised a new scheme to create two million more owner-occupiers, by launching 95 per cent mortgages for first time buyers. Much like the Help to Buy scheme, Johnson has stated that first time buyers will be able to purchase homes with a deposit of 5 per cent.
Covid-19 threatening SME housebuilders’ growth
65 per cent of housebuilders have said their business growth projections are down as a result of Covid-19, with 39 per cent reporting their growth to be down by 10-50 per cent.
In a survey of SME housebuilders conducted by the Home Builders Federation (HBF) and Close Brothers Property Finance, planning delays and securing permission were found to be a major barrier to housing delivery over the next 12 months, according to 83 per cent of respondents.
According to the HBF, however, Help to Buy has been a “lifeline” to this part of the market, with figures showing that 76 per cent of the survey respondents use the initiative on 39 per cent of their new homes sales (mean average).
In terms of financial support during the pandemic, SME developers were shown in the report to have seen varying degrees of success in accessing the Government’s measures, with some facing numerous challenges including delays, inconsistent approaches from lenders, and a refusal by some to lend to the real estate sector. Just over half of the respondents (53 per cent) have reportedly tried to access support through the Coronavirus Business Interruption Loans Scheme and of these,
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only 44 per cent of respondents had been successful. Despite this, the HBF found it “encour-
aging” that development finance was rated as the lowest barrier to growth by SME housebuilders, with 41 per cent not considering it to be a barrier. Lastly, a third of respondents reported that they employed apprentices and were training new employees, and that they make up 19 per cent of their workforce, on average (just under one in five employ- ees). Nearly half (48 per cent) of all respondents do not employ apprentices or train new employees, however, with 19 per cent only previously employing apprentices.
Stewart Baseley, executive chairman at HBF commented: “As we look to boost housing supply post the coronavirus lockdown, it is vital we support SME builders such that they can play their part. Increased bureaucracy and regulation and a harsh operating environment has seen the number of SME builders plummet in recent decades.
“Government needs to work with indus- try to develop policies that allow SMEs to grow. Doing so will increase housing supply, create jobs and stimulate economies across the country.”
He said that the Government wants to “transform Generation Rent into Generation Buy,” and will announce a number of initiatives that it hopes will give young people “the help they need to get a foot on the property ladder, while also boosting the housebuilding sector.” Johnson confirmed plans to introduce long-term, fixed-rate mortgages worth up to 95 per cent of the value of a home for first time buyers. He claimed the move could deliver the biggest expansion of home ownership since the Thatcher era. The PM commented it was “disgraceful”
that levels of home ownership among under-40s had plummeted over recent years, forcing millions of people to “pay through the nose to rent a home, which they can’t truly love or make their own.” In addition, the First Homes initiative being consulted upon currently is set to add to the portfolio of housing opportuni- ties available to first-time buyers. It is intended to provide an “important stepping-stone to full owner occupation – provided they are seen as part of the overall affordable requirement.”
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