The recent RICS Residential Market Survey indicates that housing stock is at record lows in some parts of the UK and one third of estate agents responding have seen a fall in the volume of new instructions.
Noel Meredith, Executive Director and Head of United Trust Bank’s Development Finance division, comments:
“The UK suffers from a chronic shortage of new housing and the only proper remedy is to keep building and increase the availability of good quality, reasonably priced homes for first time buyers, couples and families.
The RICS report would suggest that uncertainty over the long term implications of Brexit may have caused many existing homeowners to put moving plans on hold for the time being, perhaps until it becomes clearer what life outside of the EU really looks like. At a time when there are some concerns about the potential for UK house prices to fall, the lack of supply may underpin prices in the short term. However, this does nothing to help the longer term problem of a growing population and a new building program potentially falling well short of target.
In our experience demand for new homes remains healthy. Although the initial reaction to the EU referendum result may have been a pause to draw breath and see how the dust settled, the vast majority of people are now getting on with their lives, realising that much of what we do each day will carry on regardless of whether we are part of the EU or not, and that includes moving home. We believe there are still excellent opportunities for SME developers to feed in more of the required supply of new homes.
Some SME developers, many of which rely on third party funding, may be concerned that all banks will be less inclined to lend in the current environment, withdrawing from the sector as many of the High Street banks did at the start of the credit crunch. However, whilst some lenders may be less active, experienced specialist lenders, like United Trust Bank, recognise that the demand for good quality, reasonably priced housing is going to endure for several years, if not decades, to come, and that SME developers have an important role to play in meeting that demand. As such, as long as developers can demonstrate a thorough understanding of their market, have done their sums properly and can prove the quality of their previous work, UTB will be very keen to discuss providing the funding for their next residential new build and conversion projects.”