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Government needs to support SME housebuilder lending: IMLA

Bricks building housing construction

The mortgage market wants the Government to better support lending to SME housebuilders, according to the Intermediary Mortgage Lenders Association.

IMLA research says 61 per cent of lenders and 57 per cent of brokers feel more state support for development finance would help address the lack of housing supply.

The trade body is urging policymakers to take action on the issue.

An IMLA statement says: “Successive governments have failed to address the supply-side issues challenging the UK housing market, despite an array of different initiatives.”

The trade body criticised the Government’s recent housing white paper for not giving decent solutions to UK housing issues.

Data from the Department of Communities and Local Government shows new house completions were down 1 per cent in the year to December 2016 compared to the previous twelve months.

SME housebuilders say getting finance is one of the big challenges they face when trying to deliver new homes.

These challenges include the cost and availability of finance, unfavourable loan-to-asset ratios and reportedly poor relationships between builders and some lenders.

IMLA executive director Peter Williams says: “As well as promoting development finance, the government should explore a scheme that guarantees loans to SME builders.

“Our research reveals that lenders view the biggest obstacle they face in development finance is a higher risk of builder default.

“At the same time, builders report that accessing finance is an obstacle to increasing their output.

“By launching a guarantee scheme, or boosting lending to developers via the British Business Bank, policymakers could increase the flow of development finance and improve output in the sector.”


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