Lenders said the government’s promised new funding lines for housebuilding projects would give smaller firms the certainty needed to re-enter the market. But, “far more” needed to be done for the UK to be able to tackle housing supply issues and make homes affordable, they warned.
Chancellor Philip Hammond and communities secretary Sajid Javid this week announced a package of measures designed to reinvigorate the housing market by making it easier for SMEs and new firms to enter.
The pair revealed plans to set aside £2bn for accelerated housebuilding and to roll out a £3bn fund to provide loans to small housebuilders, as originally announced by former chancellor George Osborne during his March Budget.
New planning rules will also make it easier to build on brownfield sites by giving automatic permission in principle for suitable sites, while enabling developers to swap old office buildings with new residential construction.
Home Builders Federation executive chairman Stewart Baseley said the new measures were welcome and could get the government back on track to reach its target of one million new homes by 2020.
He said: “House builders are still stifled by planning delays that prevent them getting on sites and delivering homes more quickly. Efforts to address this and remove some of the many barriers that new entrants face when trying to make it into the industry and build new homes will undoubtedly help to boost housing output.”
He added that most of the big increases in supply in recent years were driven by the largest house builders. “If we are to get to the level of supply required we need to see more players on the pitch. We need to enable small builders to play more of a part as well as facilitating more of a contribution from other sources.”
Online specialist lender LendInvest agreed. “Relying on large housebuilders to deliver the homes we need is doomed to failure. It is absolutely right that this fund should be targeted at small builders,” said chief executive Christian Faes.
He said access to funding for SME projects had proved a “major challenge” for many SMEs in recent years, which he hoped would be alleviated by the increase in funding.
At the same time, he warned it took more than money to help SMEs build a meaningful number of new homes. “The government must act immediately to make land more accessible to them, as well as supporting measures which will ensure they develop the skill set they need to make a success of their projects,” he said.
Similarly, fellow specialist lender Aldermore warned “far more” needed to be done for the UK to tackle supply issues. “The additional funding is not enough to match demand,” said group managing director Charles Haresnape.
“Approximately a million first-time buyers are planning to get onto the housing ladder in the next 12 months, a level not diminished by the referendum vote, but in reality only around one third of those will be successful, and housing supply constraints currently in the market are a huge obstacle,” he said.
However homeowner consumer group the HomeOwners Alliance warned it was not all about the numbers.
“More homes will not be enough to tackle the ever widening gap between wages and house prices,” said chief executive Paula Higgins.
She called on the government to ensure fairer prices for younger people who have largely been priced out of the housing market and to focus on building the right types of homes.
“We would remind ministers and homebuilders that it is also their moral duty to build homes that are fit for purpose; so high quality homes that meet the requirements of not only first-time buyers but of last time buyers as well. We must build homes people would be proud to live in, not that make the most profit for the builder,” she said.