Britain is in the grip of a fundamental housing shortage, with some 345,000 new homes needing to be built every year to make up the shortfall in dwellings for the population.
While major developers are making significant commitments to build large numbers of new homes, the reality is that Britain cannot meet the demand for new residential buildings without a healthy small to the medium-sized development sector.
Back in the 1980s, small builders accounted for a whopping 40% of all new homes built, a figure that has dropped to just 12% today.
So, what’s the answer? How can we reinvigorate the SME developer industry and get Britain building again?
Access to cash
The root of the issue comes down to cash, and specifically the ease with which developers can or cannot access it at the crucial moment in their building plans.
In order to truly address the housing shortage facing Britain, smaller-scale developers and independent builders need urgent access to:
- Low deposit loans
- Quick decision making
- Finance from organisations with a real understanding of construction
With small-scale builders only beginning work on roughly 17,000 new homes in 2019, the problem is stark and the figure of 345,000 new residencies per year seems further away than ever.
So how do we overcome this hurdle?
While major banks such as HSBC have made certain strides in the last 15 years towards making access to loans easier for smaller developers and independent builders, the mainstream commercial banking sector lags significantly behind the curve of demand.
As recently as 2008, before the last great recession, the top 40 lenders financing new buildings were commercial banks.
Now, in 2021, as the world faces another seismic financial downturn, only 15% of the top 40 lenders in the sector are banks.
Banks are simply not offering competitive rates of interest to aspiring small-scale builders and developers.
Instead, alternative lenders are rapidly becoming the model for how to finance small to medium scale developments.
Unburdened by the same excessive level of time-consuming due diligence and the risk-averse approach of commercial banks, alternative lenders are stepping in at a staggering rate to help fill the financial hole in the SME developer sector and help builders achieve their ambitions.
Making building easier and faster
Independent builders and small and medium-sized developers can access the cash they need, at the moment they need it.
Call 01825 749721 today to speak to an expert at Hunter Finance and discuss how much you could borrow and on what terms in order to get Britain building.
Property page updated on 19th July 2021 by James Bougon