Financing UK's house building

Britain needs 245,000 homes each year in order to meet the needs of projected population increases and to compensate for the decline housebuilding during the recession that that saw the number of new homes being built dip below 100,000 for three years.

There has been also an associated loss in capacity in skills and materials. Government intervention to promote both supply and demand has been successful, although it has met with far greater success generating demand through the Help to Buy schemes than through unlocking supply.

The Lyons review is right to focus on skills and roadblocks to planning. However, of far greater importance is access to finance. There is far less consideration given to the potential of new investment streams that would make housing delivery less vulnerable to the ups and downs of the economic cycle.

The housebuilding and construction industries need stable, sustainable investment and SMEs need to be able to access finance in order to create long-term growth and provide diversity in the market. There are limits to how much banks will finance the sector’s growth. There are, however, alternative finance lenders willing to lend to the sector because they see the potential. The NFBis carrying out work as part of the industrial strategy for construction to raise awareness among housebuilders of the finance options available.

The funding is out there. There simply need to be better mechanisms for matching lenders with those looking to borrow and this may arrive as part of the Small Business, Enterprise and Employment Bill.

It is worth bearing in mind that for every £1 spent on construction, £2.84 is returned to the economy, providing a return that makes that investment as safe as houses.