Lack of education hampering efforts to deliver more homes

By Steve Larkin, director of development finance, LendInvest

It’s no secret that we aren’t building enough homes in this country. There are a host of reasons for that, from an over-reliance on large builders to a paucity of funding. The second-class status of property SMEs, compared to SMEs in other industries, is also a huge rod for housebuilders’ backs and it’s an issue LendInvest has been keen to highlight.

But there is also a fundamental issue, often overlooked, which is serving to hamper efforts to deliver more homes as well. To quote Tony Blair: education, education, education.

We have talked a lot in the past about the challenging time small-scale developers have; in recent decades the number of homes built by small developers has plummeted. Before 1990, three out of every eight new homes came from SME builders. Today that figure is nearer one in eight.

And if we are to address the housing shortage, that needs to be reversed. But where does an aspiring developer go to build the skillset they need in order to successfully deliver the homes the nation requires? Currently, it’s not an easy question to answer.

That’s why last year LendInvest launched the Developer Academy, a two-day course for those with some property experience allowing them to hear from, and build contacts with, experts across everything from planning permission to marketing the finished properties. We have now held two separate academies in London, with further sessions planned this year: four in London and four across the regions. So far, 50 prospective developers have benefited from these courses.

But there are other areas where greater efforts need to be made on the educational front.

Intermediaries are an essential part of the housebuilding process – if a developer requires finance, the chances are that they will go through a broker. And there’s room to do a lot more on the educational side with brokers too.

The National Association of Commercial Finance Brokers is doing excellent work to bring fresh blood into the industry through its apprenticeship scheme, an initiative LendInvest has been keen to support. The first apprentice on the scheme, Martin Neald, spent a day in our office last August.

But what about the already active broker market? Are lenders doing enough to help brokers? Are we sitting down with brokers, whether they are experienced in the development finance world or handle just a case or two each year, to ensure they are clear about how the different products work and how they can meet their client’s needs at different stages of the process?

We believe we can do more. That’s why LendInvest has launched a series of broker breakfasts. This programme of get-togethers features presentations from both our own deal team and external industry experts. The idea is rather like the Developer Academy – we know that we can’t teach brokers all they need to know about development finance in a single morning. But we can give them a structure to help with their development funding education, providing a solid starting point for them.

It involves both our established broker network, who understand development finance and can outline their own experiences, and those who are looking at development for the first time and want a helping hand.

We are holding these sessions throughout the year, both in our offices and across the country, helping brokers put in place a greater understanding of the intricacies of development finance, but also getting their feedback on the areas where lenders can offer more support. We are always looking at how we can improve and refine our service and product offering, and these events offer a perfect forum for us to better understand brokers and what they need from us.

With the property finance market constantly evolving, with innovative new products being launched regularly, it is important that brokers and lenders work together to fill in any knowledge gaps and ensure you can help deliver the best possible advice to your clients.