Government Assistance Doing Little to Help Smaller Builders

An industry study has revealed that despite ongoing efforts from the government to boost the sector, SMEs in the construction industry are struggling to access funding. Housing supply has been a firm priority point for the government for several years now, as affordable inventory in the UK continues to dwindle. Nevertheless, the inability to access funding is making it difficult for smaller housebuilders to make any real difference to the bigger picture.

The report, published last week by the Federation of Master Builders, detailed how more small and medium-sized builders are facing problems accessing funding this year than they were in 2016. Whereas around 50% pinpointed difficult access to funding as a significant roadblock last year, this has now increased to 54% for 2017.

“Almost a decade after the financial crisis, access to finance for small house builders is getting worse instead of better,” commented Brian Berry, chief executive of the FMB.

The details of the report paint a picture of an ongoing governmental push to improve and expand the housing sector that simply isn’t working. Several schemes and policies have been rolled out over recent years, one of which is the £3 billion Home Building Fund, which was created specifically to assist this part of the sector.

According to the Housebuilders’ Federation, approximately 12% of British homes were built by SMEs last year, equating to around 20,000 properties. Over the past 25 years, the number of SME housebuilders operational in the UK has declined by around 80%. While it had been expected that things would begin to show signs of turning around following the financial crisis, evidence would seem to suggest this simply wasn’t the case.

As of 2015, no more than around 1 in every 8 homes built across the country was the work of SMEs, suggests a report published by the HBF. If things were taken back to their 2007 standards, this would result in around 25,000 more annual home developments from this part of the sector alone.

Back in February, the government published a white paper affirming its commitment to the SME construction sector, though the inability to access funding continues to stand in the way of many.

“The White Paper quite rightly emphasises the need to diversify the housebuilding sector, so it is less reliant on a few large house builders. To do this, we need the government to make good on its proposals to improve the availability of small sites and speed up the planning process for small sites,” Mr Berry stated.

In turn, a growing number of developers have begun turning to alternative financial products and solutions, development-bridging loans, having seen a significant spike in popularity. Intelligent financial solutions tailored to the needs of the property sector are becoming an important lifeline for hundreds of businesses up and down the country.

For more information on bridging loans and alternative financial solutions for property development and construction, get in touch with the UK Property Finance customer service team today.