Do small housebuilders hold keys to home ownership?

Owning a home is likely to be on many peoples New Year wish list. With the Government’s commitment to deliver thousands of new homes, there are many doors opening for first time buyers, as well as opportunities for the housebuilding industry.

Mark Sismey-Durrant, Chief Executive Officer at Hampshire Trust Bank, believes that in order to make home ownership a reality for an increased number of people, the Government needs to mobilise all housebuilders – big and small.

Mark says: "Data out last week noted that UK construction activity fell to a seven-month low in October¹, which means we need to act quickly to boost and safeguard the sector. Larger volume housebuilders will be able to seize the opportunities provided by the Government more readily thanks to strong portfolio of assets and available capital. But SMEs in the sector need to look at what funding options are available to boost capital in order to follow suit.

There is increasing evidence of the important role that smaller housebuilders could be playing in addressing the housing shortage in the UK and it is vital that we support them.  The Lyons Review² concluded that the Government cannot rely on volume housebuilders alone, calling for increased support for SME housebuilders and stating that there was a need for new entrants into the market.

However, there’s not one simple answer to kick-starting SME housebuilding. In the Autumn Statement we did see some financial measures such as the extension of the Builders Finance Fund³ to 2020-21. But we must ensure that this supports the restart and acceleration of developments rather than dampening banking competition. At the same time, it’s crucial that new developments are funded too as we need more SMEs building houses overall.

Challenger banks have a key role to play in helping these businesses access finance. With the big banks turning away many of these smaller construction businesses, it’s up to challenger banks to champion these SMEs. It’s up to us to help them to benefit from the Government’s latest initiatives by providing a range of flexible and appropriate products. What’s more we will not only benefit the housing supply, we can boost SME confidence as well as help to insulate the market from external economic factors.

We firmly believe in working in partnership with housebuilders to understand the risks and rewards of a particular site or why it may be looking to build in a certain regional market. As property development opportunities materialise across the country, it will be even more important for small housebuilders to work with a bank that understands the need to work to tight timeframes on lending decisions to ensure development opportunities are not lost. 

As we move in to the New Year, challenger banks will increasingly play a role in breaking down the barriers SMEs face in securing finance to get Britain’s housing industry booming."