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