The government has announced a multi-billion pound programme of support for SME builders and the build-to-rent sector to further boost the delivery of new homes
As announced at the Budget, an additional £3bn in housing guarantees will be available to help builders apply for more accessible loans from banks and lenders.
Government guarantees are intended to reduce risk for lenders and encourages them to increase the supply of credit for housebuilders.
According to the Ministry for Housing, Communities & Local Government (MHCLG), housebuilder’s access to credit is a key constraint on growth in the sector, so guaranteeing more lending encourages more housebuilding.
Support measures announced by housing minister Matthew Pennycook includes doubling the ENABLE Build scheme to £2bn so smaller housebuilders and firms can support the delivery of over 10,000 new homes, including more student accommodation and specialised housing for older people, in areas most in need.
Build-to-Rent developers will also see the Private Rented Sector Guarantee Scheme reopen at the end of the year, with nearly £2bn available to ramp up housebuilding. A broader variety of projects will be eligible to access additional lending, so more housing projects can be completed without unnecessary delays.
Based on the performance of the schemes so far, the government estimates that the increase in guarantees would support over 20,000 more homes, says MHCLG.
Pennycook said: “SME housebuilders and Build to Rent operators have a crucial role to play in delivering the government’s target of 1.5m new homes in this parliament.
“The significant additional support provided by our housing guarantee schemes will enable them to access low-cost loans and support the building of thousands of new homes across the country.”
Brian Berry, Chief Executive of the Federation of Master Builders (FMB), said: “In recent years, small house builders have faced a particularly difficult set of financial challenges. Diversification of the UK’s housing market is essential to deliver the number of homes needed.
“[The] government announcement providing greater support for small housebuilders is welcome news. For the government’s plans to succeed, it will be crucial that this lending is available for those small house builders who need it most and can build the homes this country needs.”
Louis Taylor, chief executive of the British Business Bank, said: “We welcome this £1bn expansion of the Bank’s ENABLE Build programme by the government.
“Unlocking finance for smaller housebuilders is more important than ever, not just to help build homes across the UK’s nations and regions and provide people with security, but also to stimulate much-needed growth for the UK economy.
“Combined with the ENABLE Build programme’s recent expansion to include provision to non-bank lenders, this means that the sector will benefit from both an increased volume and choice of finance.”
Richard Green, partner at Venn Partners, said: “Build-to-rent can play a key role in the UK’s private rented sector, delivering high quality, well managed homes funded by institutional investors. Venn looks forward to continuing to support the sector with attractive loans from the PRS Guarantee Scheme.”
Image credit: bogdanhoda/Shutterstock
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