In a recent poll of over 100 intermediaries working in the fields of property and asset finance, just 8% of respondents believe the Government will meet its 1 million new homes target by 2020. Not a single broker dealing in development finance expected the Government to exceed it.
The broker sentiment survey, carried out by United Trust Bank in August, had 126 responses and of those operating in the field of development finance, 74% expect that the industry will fall short of completing 1m new homes by 2020.
When asked to indicate what they believed to be the foremost barrier to business for SME housebuilders, the most common selection was developers’ ability to find good land and redevelopment opportunities closely followed by problems with the planning process.
Key barriers to business for SME housebuilders:
|1||The ability to source good land and redevelopment opportunities||40%|
|2||Problems/delays with the planning process||38%|
|=3||Shortage of skilled labour||11%|
|=3||Ability to access development finance||11%|
Noel Meredith, Executive Director of United Trust Bank, commented:
“It’s quite worrying to see that according to the brokers who work closest to developers, the greatest obstacles to new business are the fundamental requirements of building new houses and apartments – somewhere to build homes and the permission from the planners to do so.
“A short supply of suitable green and brownfield sites will not only hamper the industry’s ability to deliver the Government’s 1m new homes target by 2020, but it will also add to house price inflation with approved development sites fetching increasingly inflated prices which will inevitably be reflected in higher asking prices for the finished products or reduced profit margins for developers.
“There’s plenty of land in the UK suitable for development but the pressures from multiple stakeholders such as local residents fearing change and conservationists concerned with the environmental impact often mean that viable opportunities are abandoned early on. It remains to be seen whether the Government’s commitment to freeing up development land will make any material difference to what is currently a dysfunctional system.
“Figures from organisations such as the NHBC regarding new home completions seem to indicate that there is a slim chance of the 1m target being met by the end of 2020. However, with the population continuing to grow, we will need to keep building new homes at an increased rate for some years to come in order to meet the nation’s future housing needs. UTB will continue to provide funding to developers who can find viable opportunities and have the skills and experience to deliver successful projects.”