Good News for Smaller Housebuilding Companies

Good News for Smaller Housebuilding Companies

15th October 2018

The UK government has pledged to build 300,000 new homes a year which means that the construction industry here in the UK will be expected to build those homes.  There have been several new schemes launched to ensure that small to medium building companies here in the UK benefit from the government’s plan to increase housing stock.  SME house builders will be given help in navigating the development finance process and access the funding they need to improve their chance of success when competing with large house building providers.

There have been several schemes designed to increase funding for SME house builders, including the Housing Delivery Fund and the Housing Growth Partnership which are backed by the finance industry in partnership with Homes England.  The Federation of Master Builders has collaborated with UK Finance to produce a guide that offers practical advice on how small house building companies should present their finance applications to lenders to improve their chance of success, with a list of alternative options for finance if the application is turned down.

The range of finance options for SME house builders has increased in recent times and finance is now available from the traditional high street lenders, government supported schemes and challenger banks.  However, it’s still the case that SMEs are often put off from applying for finance because they’re not sure which is the best option nor whether they will be successful.

The Housing Delivery Fund is the brainchild of Homes England working with Barclays to provide up to £1 billion of residential development debt funding so that more homes can be built more quickly.  It will help suitable development schemes with loans between £5 million and £100 million available to borrowers planning to increase the number or accelerate the progress of new homes in England.  A minimum of 10 homes must be built as part of the development and the borrower must be able to demonstrate a successful track record of delivering previous development schemes.  The borrower must also be a private sector organisation with a majority control of the development site in question. 

Housing Growth Partnership (HGP) is backed by Lloyds Bank and Homes England and plans to address housing affordability by providing support to residential development communities to increase the number of new homes being constructed.  HGP partners with small housebuilders and residential developers who have a proven track record and who are developing between 5 and 175 units annually. 

Homes England has a finger in both of these pies and is a non-departmental public body sponsored by the Ministry of Housing, Communities and Local Government.  The organisation brings together land, money, expertise and planning (and compulsory purchase) powers to facilitate delivery of enough new homes, where they are most needed. 

Homes England works in individual communities in order to help meet local priorities and mostly invest in building new homes and other community facilities in towns, cities and villages all across England.  These homes include affordable homes for rent and sale, along with homes for rent and sale at market prices.  Investment from Homes England helps build around half of all new homes built in England every year.