The Government risks missing its target of delivering 1.5 million homes without greater support for SME housebuilders, Aldermore warns.
Following the publication of the latest ONS housebuilding data, the lender is calling for a targeted package addressing the planning, funding and buyer-confidence challenges affecting smaller developers.
Aldermore says one-third of SME housebuilders have ceased operating during the past two decades, while larger developers account for 90% of growth in housing volumes.
Its newly published SME Blueprint sets out reforms which the lender believes could unlock up to 50,000 additional SME-built homes annually.
FINANCE THAT FLOWS
The Blueprint calls for ring-fenced SME development finance, including a government-backed loan guarantee scheme delivered through the new National Housing Bank.
Aldermore also proposes the reinstatement of the Help to Build scheme and a national target of 50,000 additional homes a year from SME developers.
The lender continues to expand its own development finance proposition, offering experienced developers funding of up to 85% loan-to-cost and 70% loan-to-gross-development-value.
PLANNING THAT DELIVERS
The proposals include automatic planning permission for qualifying sites, statutory decision periods of between eight and 13 weeks and SME-specific housing delivery targets.
Aldermore also wants financial incentives introduced for local authorities that meet their targets for approving and supporting smaller developments.
MARKETS THAT MOVE
To strengthen buyer and developer confidence, the Blueprint recommends an 18-month Stamp Duty holiday for buyers purchasing new-build homes below £500,000.
It also calls for urgent reform of the Building Safety Regulations to help clear approval backlogs currently delaying developments.
Azfar Rizvi, commercial director for commercial real estate at Aldermore, says: “Today’s figures underline the scale of the challenge facing the Government if it is to meet its ambition of delivering 1.5 million homes. The good news is that there is a significant opportunity sitting in plain sight: SME housebuilders.
“SME developers have a vital role to play in increasing housing supply. They bring forward smaller sites, support local economies and help deliver homes in communities that might otherwise be overlooked. Yet too many viable developments remain held back by planning delays, constrained access to finance and weaker buyer confidence.”
“We’ve seen first-hand the barriers they face.”
And he adds: “Having worked closely with SME developers across the country, we’ve seen first-hand the barriers they face. Our SME Blueprint sets out practical, targeted recommendations that would unlock stalled developments, bring capacity back into the market and enable smaller builders to make a much greater contribution to housing delivery.
“We’re also taking action ourselves. Supporting SME housebuilders remains a strategic priority for Aldermore, and we’ve continued to invest in and grow our Development Finance team while enhancing our proposition to better meet the needs of experienced developers.
“This includes funding transactions of up to 85% Loan to Cost and 70% Loan to Gross Development Value, providing experienced SME housebuilders with greater flexibility to progress viable developments.
“The Government’s 1.5 million homes target will not be achieved by major housebuilders alone. If ministers are serious about accelerating housing delivery, supporting SME housebuilders must be a central part of the solution.”
