UTB backs SME ‘vital role’ in housebuilding

by: Carmen Reichman
  • 14/09/2016
  • 0
UTB backs SME ‘vital role’ in housebuilding
United Trust Bank (UTB) has become the latest in a string of industry players advocating the “vital role” of SMEs in solving the country’s housing crisis.

UTB reassured small construction firms it was “business as usual” at the lender despite fears Brexit could put projects, and funding, on hold.

Executive director and head of development finance Noel Meredith said: “The UK continues to suffer from a chronic shortage of new housing and the SME developer sector has a vital role to play in meeting the need for new homes.

“In our experience demand for new homes remains strong and we believe there are excellent opportunities for SME developers to feed in more of the required supply of new homes.”

The lender’s comments came in response to findings from trade body the Federation of Master Builders (FMB) that the majority of SME builders had not been not impacted by Brexit.

Two thirds (69%) of SME house builders are yet to see any significant changes to their project pipelines the organisation found.

About a quarter of firms told FMB they had experienced delays in decision making but had not suffered actual project cancellations.

Meredith said: “The findings of the FMB survey very much reflect our own experience as a development finance lender and the approach we’ve taken since the decision to Brexit was made – it’s business as usual.

“As long as developers can demonstrate a thorough understanding of their market, have done their sums properly and can prove the quality of their previous work, UTB will be very keen to discuss providing the funding for their next residential new build and conversion projects.”

However, the FMB and specialist lender LendInvest urged the government to consider its regulation of the building sector to help firms prosper in a post-EU Britain.

Chief executive Brian Berry said: “Brexit aside, we should not paint an overly rosy picture of the situation facing SME house builders. The barriers to building that existed prior to the referendum are still hindering delivery, and as the housing crisis continues to be a pressing concern, the need to empower smaller developers must be a priority for May’s Government.

“To this end, it’s worth noting that more than half of SME house builders state that the removal of unnecessary red tape should be the most important consideration for the new government as they begin to negotiate the UK’s exit from the EU.”

LendInvest wants the government to offer SMEs preferential deals on public land as well as ban larger players from holding on to land banks.

Without a strong SME sector the government would not reach its target of one million new homes by 2020, it said in its response to the Communities and Local Government Committee’s inquiry into the housebuilding industry currently underway.

“It is not enough to set ambitious housebuilding targets without addressing the challenges in the sector that are preventing developers from delivering the targets that the government aspires to achieve. Instead, measures should be taken to address the shortages in land, opportunities for finance and the lack of skills in the sector to truly get Britain building,” the lender said.

LendInvest has also urged the government to address a “skills shortage” in the current construction sector, which was echoed by FMB’s findings.

About a fifth of SMEs had told FMB they wanted the government to find a way of ensuring a sufficient number of skilled tradespeople from the EU are still able to enter the UK after Brexit.

Berry said: “The Prime Minister insists that freedom of movement is now over and if this is not likely to be replaced by a points-based system crucial sectors like the construction industry must be reassured that whatever system does replace it, it is flexible enough to respond to our needs. Otherwise, the construction skills shortage will be exacerbated and ultimately, it will become a major barrier to delivering the housing and infrastructure projects we so desperately need.”

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