New Homes Debate: Bring back SME builders!

An “army of small housebuilders” is needed to solve the housing crisis, concluded a panel of experts at the WhatHouse? New Homes Debate, which took place today (20 September) at the Emirates Stadium in London. “The big developers are never going to build 50,000 houses,” said Richard Blakeway, Chief Executive of the London Chamber of Commerce and Industry (LCCI).

However, SME builders have been in short supply since 2008, with many not returning from the depths of the global financial crisis. The myriad of challenges faced by small housebuilders emerged as a key talking point at the New Homes Debate.

According to Neil Jefferson, Business Development Director at the NHBC, the UK’s clunky planning system is toxic to an SME builder’s cash flow. “Small builders cannot afford delays,” he said. “Delays will send a small housebuilder under. An SME housebuilder needs to get onsite quickly, and speeding up the planning process must be a priority.”

Access to finance is another common enemy. “The number of SME builders has dropped dramatically,” said Charles Haresnape, Group Managing Director of Aldermore. “What is missing is finance for the small developer. The big developers cannot take up the demand. Twenty per cent of SMEs still find finance a challenge. Mezzanine finance is good but expensive.”

Marc Eden, Co-Founder of Regal Homes, said that banks need to be incentivised to lend to SME housebuilders. While over 20 government funding schemes are available, they lack the efficiency SMEs need to secure sites. “if you have a site you won’t go to the government – it takes too long and there’s too much red tape and not enough transparency,” he said.

According to Kate Davies, Chief Executive of Notting Hill Housing, housing associations could be part of the answer. Well-funded by the bond market, housing associations are in a position to provide finance at low rates. “Come and talk to housing associations – we have no problem getting money – we have over £400 million to invest,” she said.

However, housing associations can only be part of the answer. “Our problem is getting land,” Davies added. “The political will and skilled labour is in the hands of other parties. There needs to be more political will. Everyone’s talking about the housing crisis but it will take some ground-breaking thinking to solve it.”

Eden agrees that more action is needed. “Hitting housebuilding targets is never going to happen unless you get the SME market moving, which will take a number of years to do,” he said. “Everyone is focussing on demand. Unfortunately, if you don’t deal with supply you’ll always have a housing crisis.”

The WhatHouse? New Homes Debate 2016 was hosted by Globespan Media in partnership with the London Chamber of Commerce and Industry, and was sponsored by Aldermore bank, Hansgrohe and the NHBC.

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