LendInvest is calling on the UK government to forge better partnerships with the alternative finance industry to widen and accelerate access to finance for Britain’s small and medium-sized property investors and developers.
In a new report entitled Putting Finance First: the alternative route to funding Britain's SME housebuilders, LendInvest recognises that the government is trying to help improve the outlook for property SMEs, but argues that not enough is being done to put rhetoric into action.
The report centres on three proposed initiatives that combine existing government-backed funding mechanisms with the experience and expertise of alternative lenders, like LendInvest, to speed up and increase the supply of finance to property SME businesses:
England should deploy its £2.5bn Home Building Fund through funding lines
agreed with alternative lenders, like LendInvest.
• Local authorities should co-invest with alternative lenders in local developments, utilising the Public Works Loan Board mechanism to provide discounted capital for SMEs.
• The British Business Bank should appoint more alternative lenders to use the ENABLE Guarantee programme to underwrite property investment and development loans.
The report includes important contributions from Mark Prisk MP (former housing minister and member of the communities and local government select committee), Brian Berry (CEO of the federation of Master Builders), Jiři Król (deputy CEO and global head of government affairs at the Alternative Credit Council) and Nick King (former special adviser to Sajid Javid MP).
Christian Faes, co-founder & CEO of LendInvest, comments:
“Every week we could lend more to SME housebuilders that are struggling to obtain finance, if the government worked with us to help fund those developers. The government is clearly trying to get more homes built across the UK. However the government needs to work with alternative lenders, like LendInvest, to help get critical funding to SME housebuilders. Our proposals offer common sense solutions to a major market crisis, using tools that government already has at its disposal.”
Mark Prisk MP, former housing minister and author of the report’s foreword, said:
“The evolution of fintech and the emergence of new finance models are an opportunity for government to explore alternative routes to funding future homes... What is required, as this report emphasises, is a combined effort by government and private partners to ensure small builders have access to the finance they need, to help affect the change.”
Brian Berry, CEO of the federation of Master Builders and fellow foreword contributor, adds:
“I fully concur with the strong case put forward by this report for improving access to finance for small developers. Above all, I warmly welcome the contribution that this report makes to an important conversation around the different ways in which government (both central and local) can work with private sector lenders and developers to build a healthier housebuilding industry in this country.”
The number of property SMEs operating in the market has fallen by 80% since the last housebuilding boom. Yet, research shows that by returning to a pre-financial crisis number of active SMEs, 25,000 more new homes could be added to the market every year.
This is LendInvest’s second public report into the unfair treatment of property SMEs. Its first report, Starting Small To Build More Homes: a blueprint for better policymaking for property SME market, was published in March 2017, bringing together industry evidence for the first time to examine the root cause - and subsequent impact - of challenges faced by property SMEs.