Residential developers in 2019: Demonstrate demand and your skills to convert into sales

“In the current environment, it is important to re-iterate to housebuilders and
developers that a good scheme with sensible cost and income assumptions (e.g.
sales rates and within Help to Buy parameters) can secure funding with Wolsey.
Brexit is a factor that needs to be recognised but once resolved, demand remains for
new homes at prices providing they are affordable.  We expect funding to tighten at
least in the short term, so funders will have more options and SME developers need
to remember this.      
 
The focus for SME residential developers must be to demonstrate both the sales
demand of their housing scheme and the ability to convert interest into sales to gain
support from funders.  Providing it is demonstrated, the sector provides attractive
returns which will in turn attract investment.
 
The broader question is perhaps what could Government be doing more of to
stimulate growth in SME householders to reinvigorate this segment of the sector and
create the big Nationals of tomorrow.  Equity remains the key issue from a finance
perspective and the ability to raise equity at sensible returns for SME housebuilders
and residential developers. 
Wolsey has long been an advocate of widening tax break initiatives such as
enterprise investment schemes to specifically target and encourage new residential
developers into the market and assist existing housebuilders to grow their
businesses. This would be a huge boost to the housebuilding industry bringing in
new capital and allowing sites that are currently too difficult and/or too small or break
even at best to become attractive opportunities for residential development."
Stephen O’Brien, MD of Wolsey Group
January 2019

Give SME Housebuilders the financial tools

Give SME Housebuilders the financial tools

Stephen O’Brien in Housebuilder this month talked about the importance of Government creating more initiatives, including tax breaks and enterprise investment schemes, that encourage small developers to grow and become medium sized developers. “We won’t get 300,000 without it!”

Wolsey wants to see their client’s grow and more developers enter the market, explaining that “a lack of capital is a significant issue when it comes to ensuring a healthy pipeline of SME’s”.

Giving SME residential developers the right financial tools will be the incentive they need to put more of their tools in the ground.

September, 2018

First rise in interest rate in ten years.

Wolsey comments: "the 0.25% rise in interest rate to 0.5% announced by the Bank Of England today is not in itself too significant to the residential development market in the short term, nor to Wolsey's lending criteria to SME housebuilders. What is more significant is that it is the first upward move of interest rate announced by the Bank for ten years. Does it mark the beginning of a longer term change in strategy? We will, of course, have to wait and see. But, the market is still a long way off the levels of interest rate that the Bank has set over the last fifty years or so, which averages out at around the 5% mark."

Do contact Wolsey for all your development financing needs.

2nd Nov, 2017

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.


October, 2017

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
£10million.

September, 2017