SME housebuilders risk “a huge crisis” without alternative lenders

Assetz Capital has warned that small- and medium-sized enterprise (SME) housebuilders risk “a huge crisis” if they are unable access funding from alternative lenders.

Stuart Law, chief executive of the peer-to-peer lender, has urged the government to intervene to make it easier for smaller housebuilders to take advantage of an ongoing surge in construction activity.

The latest monthly construction figures showed that construction output increased for the seventh consecutive month in May.

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Furthermore, the level of construction output in May 2022 was 4.1 per cent above pre-pandemic levels, demonstrating the rising demand for new properties.

However, Law warned that a lack of funding options means that many SME housebuilders still risk going under due to a lack of available financing, and the rising cost of raw materials.

“Banks are visibly pulling back funding for SMEs and the government has shown little willingness to support or revitalise the SME construction sector,” said Law.

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“In 1988, small developers were responsible for four in every ten new build homes. Today, it is around just 10 per cent. If this continues, we risk a huge crisis in the construction industry with even more SMEs going under, and dwindling hopes of meeting the government’s target of building 300,000 new homes every year.

“The government can no longer side-line this issue – large construction companies will only solve a fraction of the issues. We need to see quick change that gives SMEs greater access to alternative funding, such as P2P financing, as well as simplification of the planning process.

“This will enable SMEs to grow and scale up.”   

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