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A Few Home Truths

In her speech last week, the Prime Minister, Theresa May, announced a renewed government focus on housing, promising a more robust approach to tackling the shortage of homes in the UK. She highlighted existing planning processes as a “root cause” of the housing crisis, promising to “rewrit[e] the rules on planning” and calling for both […]

Tom Buttress

Tom Buttress

March 15th, 2018

In her speech last week, the Prime Minister, Theresa May, announced a renewed government focus on housing, promising a more robust approach to tackling the shortage of homes in the UK. She highlighted existing planning processes as a “root cause” of the housing crisis, promising to “rewrit[e] the rules on planning” and calling for both builders and developers to “step up and do their bit”.

She went on to criticise developers who profit from building expensive properties rather than the quantities of new homes the country needs and announced plans to penalise developers who do not build homes quickly enough.

60% of the UK’s homes are built by just 10 companies

The speech comes following the publication of the 2017 Housing White Paper which outlines a list of proposals targeted at local authorities and property developers as well as investors, communities and housing associations. Within the paper, the government highlights that around 60% of the UK’s homes are built by just 10 companies, expressing a desire to diversify the housing market and increase the number of small and medium-sized builders and developers (SMEs).

We know that SME developers are integral to a healthy housing market in the UK, yet there has been a long-term decline in the amount of SME housebuilders, falling 80% over the last 20 years according to the Home Builders Federation. Lack of access to finance is a major barrier to entry for these SME’s, with the regulatory changes that were imposed on the banks in the wake of the financial crisis making it more expensive for lenders to support developments. These changes have resulted in a huge decline in lending in this sector.

In the White Paper, the government outlines its solution to this – the Home Building Fund. They anticipate that this £3bn fund will help build 25,000 homes this Parliament and 225,000 in the longer term through loans for SME and custom builders, offsite construction and essential infrastructure – creating thousands of new jobs in the process. Moreover, Tuesday’s Spring Statement announced that the Housing Growth Partnership, which provides financial support to SME builders, will be more than doubled to £220m.

Whilst on paper, that seems like a fantastic premise, the reality of the situation is that Government funding alone cannot solve the financial challenges that SME’s face nationally. Whilst this funding is welcome, it just simply isn’t enough to put these plans into action.

Here at Propio, we’re doing our bit to try and change this. We were started in a response to the fact that many smaller developers don’t have the funding they need. As experts in property development, we saw an opportunity to help these smaller builders get their projects off the ground in a way that could promise healthy returns for investors. We’re working hard to bring our investors a diverse portfolio of opportunities which we believe will go some way to helping build more UK homes.

Tom Buttress

Written by

Tom Buttress

March 15th, 2018

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