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Finance is only one hurdle for small developers

The housebuilding market in its current form simply isn’t working. We are completely over-reliant on the biggest players in the industry – the largest nine are responsible for more than 50 per cent of the new homes built in the UK.

But there is a reluctance to do more, particularly in this uncertain post-Brexit world. And with housebuilding lagging so far behind target, this cannot go on. Clearly, if we are to deliver the homes that the nation needs, someone else is going to need to pick up the slack. That means boosting the output from small and medium-sized developers.

Whenever industry figures talk about what can be done to help small to mid-sized developers, the main focus is always finance. The liquidity rules implemented since the credit crunch mean that the traditional high-street banks are less likely to be in a position to work with smaller developers. As Andrew Antoniades, director of CBRE Capital Advisors, put it last year, although the availability of development finance improved during 2015, “it is still highly selective and often only available for the most desirable schemes”. The small-scale developer is often on the outside looking in.

But the truth is that money is just one aspect that is hindering the prospects for these developers.

Access to land is a significant problem for many developers. A study by the National House Building Council in 2014 named land availability as one of the three biggest problems faced by small builders, with the availability of suitable small sites at manageable prices on the decline. This is an area where the Government can clearly do more. Just 8 per cent of the public land it has promised to release for housing developments during this parliament has been achieved, which is simply nowhere near enough.

What’s more, if we want to see small developers build more homes, we need to do far more to arm them with the skills they need in order to take on housing projects.

That means teaching them how to evaluate a potential development site, helping them negotiate the planning permission minefield, guiding them on what company structure is best for them and ensuring they understand the various cost implications of the scheme.

We have launched the LendInvest Property Development Academy for precisely this reason, to give the next generation of developers the helping hand they need in order to deliver the housing that, as a nation, we are desperate for.

Only by tackling all three issues – finance, land and skills – will small builders be able to step up and offer a significant boost to housebuilding in the UK.

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