LendInvest, an online property finance marketplace, is demanding the government to revise its treatment of small and medium-sized property investment and development companies. Noting that four in five SMEhouse builders have disappeared since last housebuilding boom, LendInvest is calling on the government to recognize the positive contribution they can make to resolving the UK’s deep-rooted housing crisis.
In a new report entitled Starting Small To Build More Homes: a blueprint for better policymaking for property SME market LendInvest shares industry evidence to examine the root cause – and subsequent impact – of challenges faced by property SMEs such as constrained access to finance and distorted policy around regulation, taxation and access to land.
Christian Faes, co-founder & CEO of LendInvest, explained;
“80% of small-scale developers have gone out of business since the last housebuilding boom. That’s an appalling statistic. It’s meant less employment, less entrepreneurialism and fewer new homes on British streets where large-scale housebuilders didn’t pick up the slack. Decades of successive governments’ under-investment and muted decisions, coupled with a planning system that defaults to favouring larger sites over small ones has cumulatively left UK housing in a dire situation. The Housing White Paper showed us there are no quick fixes, but incremental improvements can and must be made.”
Faes said it was imperative that the government encourage careers in property and that these businesses need to know they will be treated the same as startups in other sectors.
“Failing that, we risk losing another generation of property entrepreneurs. That mustn’t happen. It’s time to mix small-scale housebuilders into the debate and give them the chance to help get Britain building,” said Faes.
Key findings from the report include:
- Four in five housebuilders have gone out of business since the last housebuilding boom
By returning to the same level of market plurality as in 2007, we could build 25,000 more homes every year
- Small housebuilders were responsible for 3 in 8 of the UK’s new homes before 1990, today they only deliver 1 in 8
- The British Business Bank has yet to allocate funding for property firms
- The Homes & Communities Agency must lend a weighty £56m a month to achieve its target to supply £3 billion of housebuilding finance by March 2021
The report also includes the social and economic contributions that property investment and development SMEs make locally and nationally, and makes recommendations to end a protracted preference by the government for muted support of this industry sector.
- Mandate state-backed finance bodies, like the British Business Bank and Homes & Communities Agency, to begin or accelerate the provision of funding to property SMEs
Apportion a quota of public land for sale only to SMEs
- Simplify tax burdens to help property SMEs reinvest capital into business development
- Initiate a strategy to boost competition by enlisting cooperation of the offices of the Housing and Small Business Ministers
And Marc Vlessing, CEO of Pocket Living, the property SME, commented on the findings in the report;
“It is no coincidence that as the number of SME developers has declined so too has the number of homes built. A renaissance of SME firms like Pocket utilising modern methods of construction on smaller, often overlooked, land plots will be crucial to helping solve our housing crisis. The Government has laid the foundations for this renaissance through the Home Builders’ Fund but we still have some way to go. Simplifying the tax system, ring-fencing some public sector land for SMEs and making it simpler for them to access capital would all help to unleash the potential of the SME builder.”
The report is embedded below.