P2P to play vital role as government misses housebuilding target
Peer-to-peer property lending platforms have affirmed that the sector can play a vital role in funding the development of new homes after the government missed its new build target by 120,000.
According to research from new-build sales optimisation platform Unlatch, in 2021 the government missed its new build delivery target by 39 per cent, or 120,000 homes. The target set out in the Conservative Party manifesto of 2019 was for 300,000 new homes to be built every year.
P2P lenders have suggested that the alternative lending sector can help to close this gap, by providing funding to small- and medium-sized enterprise (SME) housebuilders who otherwise struggle to access finance.
Read more: P2P property platforms call for urgent planning reform
“It’s not a huge surprise the government missed its target, and P2P and crowdfunding can absolutely help in this space,” said Atuksha Poonwassie, managing director of Simple Crowdfunding.
“In essence, smaller homebuilders have found it more challenging to get funding, so P2P and crowdfunding platforms have stepped in to fill that gap which gets those projects funded which means more homes built.
“The processing structure has gone up significantly and it’s become more challenging. We can help with different funding solutions.
Read more: Planning, materials and labour shortages threaten SME housebuilders
“If the developer still wants to go ahead with a project, being more fluid with the finance piece of it will allow them to continue that. If that project has a reduced profit margin, traditional lenders might not consider it when some alternative lenders might, by reducing the loan-to-value.”
Assetz Capital, the UK’s largest P2P platform, has also been vocal about the vital role that SME housebuilders play in meeting national housebuilding targets and highlighted a lack of financial support from traditional sources of capital.
“We have seen little appetite from high street lenders for SME lending since the financial crisis of 07/08 and money available from the public purse, through Levelling Up or other programmes, simply isn’t sufficient to meet our housing needs, especially as demand for new builds continues to outstrip demand for older properties,” Assetz Capital’s chief executive Stuart Law recently told Peer2Peer Finance News.
Read more: Assetz Capital chief warns of six months of “instability” for housebuilders
“There is strong demand from private investors for higher yielding, property-backed investments, especially where they can invest in diversified portfolios which they can manage flexibly and lower their risk profile.
“P2P is a crucial method through which we can harness investor demand, generate essential working capital for housebuilders, and boost construction output to meet the nation’s housing needs and support the economy.”
State-backed support schemes introduced during the pandemic saw the government provide funding through a range of lenders, including P2P platforms, and some stakeholders have suggested that this should happen again to support the SME housebuilding sector.
Lee Birkett, chief executive of JustUs, has said that the government could specifically target funding for SME housebuilders and bespoke construction projects via P2P platforms.
“Like the British Business Bank lent alongside the crowd, the government could target new build funding or provide Bank of England access to cheap funding through alternative platforms,” he added.
