Posts with tag: small builders

Small builders receive £100m boost

Published On: July 7, 2015 at 11:52 am

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Categories: Landlord News

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Small builders have received a boost with the news that £100m is to be given to them as part of a joint investment with Lloyds Bank.

Announcing the news today, Housing Minister Brandon Lewis said that the Government is to match the £50m investment from Lloyds Banking Group to create the Housing Growth Partnership.

Assistance

The partnership aims to help small builders to invest in fresh projects and expand their business. This in turn will enable builders to recruit more skilled tradesman and will hopefully see them become more established in their local area.

As a starting expectation, the partnership hopes to make around 50 investments, which they hope will lead to the provision of 2,000 homes. Additionally, the scheme aims to create a network of builders, who will then act of mentors to those looking to develop their business.

Falls

During the last 25 years, the number of firms building between 1 and 100 units per year has dipped from in excess of 12,000 to less than 3,000. However, latest figures show that building starts have increased at more than double than in 2009. Starts and completions were both found to have risen in the last year and the total number of homes given planning permission is currently at the highest level for 8 years.[1]

‘The 2008 economic crash devastated our army of small builders, with delivery falling from 44,000 homes to just £18,000,’ said Mr Lewis. ‘7 years on, companies are getting back on their feet but we’re determined to give them all the help they need. Access to finance is one of the biggest challenges they face-so that’s why today I’m launching this £100 million commitment which will help our small builders fund new projects, expand their businesses, create more jobs and build more homes.’[1]

Mr Lewis added that, ‘with housing starts at a 7-year high and climbing and homes granted planning permission at 261,000-the highest since 2007, this work will ensure we maintain this momentum and keep the country building.’[1]

Challenge

Andrew Bester, Chief Executive of Commercial Banking at Lloyds Banking Group believes, ‘the challenge of housing supply and affordability is one of the biggest issues facing Britain today.’ He said that Lloyds welcomed the Government’s support of the Housing Growth Partnership , adding that this, ‘will provide SME house builders with much needed equality to support residential development projects, to stimulate growth in their businesses and facilitate access to conventional property development finance.[1]

Small builders receive £100m boost

Small builders receive £100m boost

‘We believe building both a greater quantity and mix of homes will help Britain prosper and this partnership will help address the issue of housing supply in the UK,’ Mr Bester added.[1]

Brian Berry, Chief Executive of Federation of Master Builders noted, ‘there has been a sharp decline in the numbers and output of SME house builders over the past 8. One of the biggest obstacles these firms have faced is a severe difficulty in accessing finance. Without adequate access to finance they cannot bring forward the number of new homes they would otherwise.’[1]

The new Housing Growth Partnership will directly help to address this issue and the additional £50 million greatly increases the scale of what can be achieved. We commend Lloyds Banking Group and the government on their trailblazing approach and we hope this marks a real turning point in the fight to provide adequate finance to the SME house building sector,’ he added.[1]

[1] http://www.propertyreporter.co.uk/property/housing-minister-announces-100m-housing-partnership-with-lloyds.html

 

 

Investment Bankers Want Financial Support for Small Builders

Published On: May 26, 2015 at 11:44 am

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Categories: Finance News

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Investment bankers believe that small house builders need more financial support in order to help Britain resolve the housing crisis.

Property finance specialist at London-based corporate adviser and financier Nash Fitzwilliams, Adrian Pritchard, says that tax breaks could be extended to help builders: “Smaller builders are finding it difficult to access equity capital to build. They are good at filling in the gaps to optimise existing housing stock.

“Larger house builders are too big to attack the myriad of smaller opportunities available on a national basis.”

Investment Bankers Want Financial Support for Small Builders

Investment Bankers Want Financial Support for Small Builders

He thinks that tax breaks, like Enterprise Investment Schemes and Venture Capital Trusts, should be applied to building, a sector that is now excluded: “This would go some way to alleviating the current shortage of homes.”1

In the last few years, small house builders have used alternative lenders for backing.

Head of Real Estate at peer-to-peer lender Funding Circle, Luke Jooste, says: “We’ve been inundated with demand from successful property developers looking to increase the supply of housing to the UK population.”1 

Recently, Funding Circle investors lent £5m to Verto Homes, which is creating 21 eco-friendly homes in Newquay, Cornwall.

Close Brothers’ investment banker Stephen Hodges explains: “The number of small and medium-sized builders has halved since 2007. Many high street lenders pulled back from lending to them in the recession and have been slow to return.

“By contrast, we have tripled our lending to the sector since 2007 and are funding more than 500 UK developments. We continue to see good demand from small house builders and are keen to support them as regional markets recover.

“Large, listed builders have better access to finance – via equity or bonds through the markets – and better access to bank loans at good rates.”1 

It is believed that the Treasury is cautious of extending tax breaks to builders, saying that the value of land supports the investment.

A Home Builders Federation spokesperson says: “We would support any scheme that provided finance – whether it is equity or debt that allowed more SMEs [Small and medium-sized enterprises] to build.”1

1 http://www.thisismoney.co.uk/money/mortgageshome/article-3094994/Key-solving-housing-crisis-Giving-smaller-housebuilders-financial-support-investment-bankers-say.html