Boosting the number of homes remains high on the agenda
The BMF is pleased that housing remains high on the political agenda and consensus exists for more concerted action. Political parties were clear at the last General Election in their ambition to boost the number and type of homes.
It is widely accepted that we need 250,000 new homes per year (at least) to keep out with the run-rate. Yet large housebuilders & developers only put up between 136,000 and 150,000 units - maybe 170,000 in a good year. The balance comes from housing associations and other public or private landlords. The BMF says Changing the Ratio will help to increase the players in the housing market.
Whilst homes from self- & custom-building is welcome - and better use of existing buildings pays a part - their contribution is limited and not enough to reach the level required. ‘Changing The Ratio’ means liberating and mobilising overlooked but vital players - local authorities and SME private builders - to change the ratio between the volume builders and the rest.
On local authorities, pressure is being applied on central government by local authorities, think-tanks others to lift financial restrictions on councils that prevent them from building more homes.
On SME private builders, the no.1 reason often cited as a barrier to building is the availability of operating & project finance. One of the strengths of the trade is the low-cost entry for start-ups that allows new players to join the market. But small & micro-businesses face considerable difficulty in raising finance. SMEs are seen as risky and stories abound of short-notice tightening of overdrafts, unreasonable collateral demands, or outright rejection.
The £3 billion Home Building Fund announced in October 2016 is a good step in the right direction. But traditional banks and new & alternative finance providers do not lend enough to real-world businesses. This is the aim of our Changing The Ratio campaign.
Our ask of government
is to improve the availability of readily-obtainable finance, lent responsibly, to credit-worthy borrowers, at decent rates, to enable SME private builders to return to the market and do what they do best.