The Help to Build Scheme, outlined by shadow chief secretary to the Treasury Chris Leslie MP and Shadow housing minister Emma Reynolds MP, pledges to underwrite bank loans to small housebuilders to help them grow their businesses.
Writing for the New Statesman, the shadow ministers said findings from the Lyons Housing Commission, set up by Ed Miliband to get 200,000 homes a year built by 2020, showed a need to increase competitiveness in the housing sector.
“Figures show that 25 years ago small builders were building two thirds of new homes. Now they’re not even building a third of new homes. Over the same period, the number of firms building between one and 100 units has fallen from over 12,000 to fewer than 3,000.”
A survey from the Federation of Master Builders revealed 60% of house builder members cited access to finance as a major barrier to their ability to increase their output of new homes, more than any other factor.
The shadow ministers added: “Our proposals would kickstart the supply of homes by providing government guarantees for bank lending to SME construction firms in a similar way to how the current Help to Buy scheme underwrites mortgages.”
They criticised the current Help to Buy scheme for boosting demand for homes without tackling the supply issue.
Labour claimed its policy would encourage small house-builders to deliver more homes while stimulating the local economy and keeping house price inflation under control.
Help to Build would place a cap on the value of loans available for each development to make sure the money was be directed towards small builders rather than the giants in the industry. Normal bank checks on firms’ ability to repay will be carried out.
