The Labour Party’s proposal for a ‘Help to Build’ guarantee scheme to improve access to finance for smaller and house builders would be a welcome boost to the supply of new housing , says the Federation of Master Builders (FMB).
Brian Berry, Chief Executive of the FMB, said: “To provide the number of new homes we need in this country both builders and buyers need access to finance. Labour’s ‘Help to Build’ would complement the Government’s ‘Help to Buy’ initiative because current restrictions on access to finance for SME house builders still remain very severe.
The Government’s Help to Buy scheme has been a major factor in the upturn we have seen in house building over the past 12 months, and the Chancellor’s announcement that Help to Buy: Equity Loan will be extended up until 2020 provides some welcome long term reassurance, but more help is needed to tackle access to finance.”
Berry continued: “When it comes to loans for smaller residential developments the default answer from many banks is ‘no’. When finance is available, it is too often being offered on steep terms; at high rates of interest, low loan to value ratios and often with exorbitant fees attached. What is concerning is that there has been very little sign of improvement in this situation over the past year.
“The SME house building sector used to deliver around two thirds of all new homes. It now delivers less than one third and the number of firms in the market has plummeted over the past five years, further reducing the industry’s capacity. Without access to finance on reasonable terms, SME house builders will remain hamstrung in their ability to increase the supply of new homes.”