"Every week we could lend more to SME housebuilders that are struggling to obtain finance, if the government worked with us to help fund those developers. "
In its new report, LendInvest argues that "not enough is being done to put rhetoric into action" and proposes three initiatives that combine existing government-backed funding mechanisms with the experience and expertise of alternative lenders to speed up and increase the supply of finance to property SME businesses.
It wants Homes England to deploy its £2.5 billion Home Building Fund through funding lines agreed with alternative lenders, and believes the British Business Bank should appoint more alternative lenders to use the ENABLE Guarantee programme to underwrite property investment and development loans.
LendInvest also wants to see local authorities co-investing with alternative lenders in local developments, utilising the Public Works Loan Board mechanism to provide discounted capital for SMEs.
Research shows that the number of property SMEs operating in the market has fallen by 80% since the last housebuilding boom, but by returning to a pre-financial crisis number of active SMEs, 25,000 more new homes could be added to the market every year.
Christian Faes, co-founder & CEO of LendInvest, commented: “Every week we could lend more to SME housebuilders that are struggling to obtain finance, if the government worked with us to help fund those developers. The government is clearly trying to get more homes built across the UK. However the government needs to work with alternative lenders, like LendInvest, to help get critical funding to SME housebuilders. Our proposals offer common sense solutions to a major market crisis, using tools that government already has at its disposal.”
Mark Prisk MP, former Housing Minister and author of the report’s foreword, commented: “The evolution of fintech and the emergence of new finance models are an opportunity for government to explore alternative routes to funding future homes... What is required, as this report emphasises, is a combined effort by government and private partners to ensure small builders have access to the finance they need, to help affect the change.”
Brian Berry, CEO of the Federation of Master Builders and fellow foreword contributor, added: “I fully concur with the strong case put forward by this report for improving access to finance for small developers. Above all, I warmly welcome the contribution that this report makes to an important conversation around the different ways in which government (both central and local) can work with private sector lenders and developers to build a healthier housebuilding industry in this country.”
