Government Pledge to support Housing Market and funding for the SME market
Prime Minister at the Conservative Party Conference, has pledged that her Government will do more to support the housing market. The state, she said, must get "back in the business" of building subsidised rented homes for those not able to buy.
The government announced a £2.5m boost to help speed up the delivery of over 155,000 new homes in English garden towns. Wolsey anticipates this intervention will be a boost to the housebuilding sector overall and lead to an increased flow significant private investment into a very hungry private residential development housing market.
The government has also announced it will invest a further £10bn in the Help to Buy equity loan scheme. It is expected that the new funding will assist around 135,000 more people to buy homes over the next four years, bringing the total number of households across England helped by the scheme to around 360,000. Figures have revealed that to date, 81% of home purchases using the equity loan scheme have been made by first-time buyers. For clients of Wolsey it should be seen as very positive news that the Government is committed to supporting the Help to Buy scheme through to 2021.
Wolsey continues to remain concerned at the barriers SME developers continue to face to undertake and thus grow their business. Whilst Wolsey supports the sector with funding, reducing the costs of gaining sites with planning permissions has to remain a key focus for the sector. It is fundamental to the long term stability of the sector and delivery of supply that SME developers are encouraged and can create sensible profits for the risks being undertaken.
Finance For Housebuilders – high on agenda
A feature in Housebuilding Magazine focuses on development finance and how it has become the
major contributory factor accounting for the declining role of smaller housebuilders in contributing
to the overall proportion of new build. Residential development finance for SME housebuilders who,
as we know, need to move fast when an opportunity arises, can be hard to secure.
Angus Whimster, Wolsey’s South East regional managing director comments on this “tougher”
market: “lending from mainstream institutions is generally more cautious and we have seen certain
specialist lenders slightly reign in their appetite.” Not Wolsey - with its twenty plus years experience
in financing housebuiders, Wolsey is actively lending to schemes with a gdv of £1million up to
Wolsey finds Solutions
“There is much talk at present about the need to increase the supply of housing to an ever increasing population.” comments Chris Foulkes, Director of Investment at Wolsey, the development finance specialists for housebuilders. “The major house builders are largely stepping up to the plate in this regard, but we forget that, not too long ago, it was the small to medium sized house builder that was producing nearly half the new housing supply. Not the case today.
Lack of residential development funding ‘where with all’, and starved of supplementary funding availability, combined with an ever more bureaucratic , lengthy, and expensive planning process, has largely squeezed the life out of this vital part of this housing supply sector.
Finding solutions to residential development finance requires imaginative thought combined with trusting business relationships. One such example is St Annes Road , Willenhall (pictured). Funded through Wolsey, this scheme by Dunedin Homes, has proved a remarkable example of how impossible commercial odds can be overcome.”
Housebuilder Magazine, June 2017
Stephen O'Brien interview with Housebuilder Spring 2017
Stephen O’Brien, recently interviewed by Housebuilder Magazine for his views from the property development finance perspective on the current market, focuses on the theme of segmentation in the market.
“If it is the right segment of the market things are looking OK. Certain parts I’d describe as more challenging. The upper end of the market over £2million where there are stamp duty changes or overseas buyers – they’re adjusting to the current environment. But, the adjustment in sterling has assisted a bit. Regional markets in which Wolsey mainly operates are fairing considerably better – where there is local housing for local needs.”
Since the EU referendum high street lending of development finance for housebuilders has continued to constrict, with banks agonising over market demand for schemes and their affordability. “I would say that for SMEs it continues to be a tougher environment. That’s where specialist residential development funders like ourselves come in who are comfortable with risk.”
Advice to housebuilders is to plan new homes that are Help to Buy eligible. “There is strong demand for Help to Buy product. It’s a very good initiative. The government sees housing as an important factor for the economy and social mobility. The nearer we get to its expiry date the more we need clear advice on its future.” Certainly as lenders of property development finance for housebuilders Wolsey is very supportive of the Help to Buy initiative.
Taken from interview with Housebuilder Magazine, Spring 2017