Solve the housing crisis by supporting SME housebuilders
More support for small- and medium-sized enterprise (SME) housebuilders is vital if the new Labour government wants to solve the housing crisis, easyMoney has claimed.
Keir Starmer’s government campaigned on its promise to build more homes, with a target of building 1.5 million houses within the next five years. However, Jason Ferrando, chief executive of property lender easyMoney, believes that access to funding is the bigger threat to the UK property market.
“A focus on greater supply is admirable but it’s housebuilders who deliver homes, not politicians,” says Ferrando.
“Unfortunately, the big housebuilders aren’t inclined to burn their land banks as flooding the market with supply will only devalue their product in the process and if even they did, the top 10 housebuilders are unlikely to build the 300,000 homes a year we need.”
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Instead, Ferrando has called up on the government to “revitalise the SME landscape and support SME housebuilders to help tackle the housing crisis.”
“Tax relief is probably the most effective method to get them building and in doing so, many smaller hands could make light work when it comes to hitting annual supply targets,” he added.
easyMoney is one of the most active property lenders in the UK, with more than £380m in written bridging and development loans to date. These loans are funded by retail and sophisticated investors, who can access the platform’s competitive returns with investments of as little as £100.
“Peer-to-peer lending allows anyone to invest at any price point via our Innovative Finance ISA and by pooling this investment we are able to fund the construction of new developments across the country, further boosting the supply of new homes reaching the market,” says Ferrando.
He added that there hasn’t been a great deal of noise from the new Labour government with respect to the lending landscape, with the initiatives announced so far largely focussing on supply and reform, particularly with regard to both the leasehold and lettings sectors.
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“Time will tell how they plan to make property lending more accessible but what we certainly don’t want to see is the introduction of high loan-to-value products such as 95 per cent mortgages, as these only destabilise the market by fuelling demand, ignoring the issue of supply, and encouraging buyers to over-borrow,” he adds.
The year to date has been characterised by slow and steady growth, with buyer activity remaining somewhat muted due to the continued obstacle of higher mortgage rates. However, house prices have held their own and in recent months have started to show signs of positive growth.
“With the election now done and dusted and with the prospect of a rates cut on the horizon, we expect mortgage market activity to increase over the coming months, with house prices following suit,” says Ferrando.
“With such a focus on housing delivery, let’s hope that historic trends will be reversed and we will see a notable boost to housing supply over the next five years.”
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Read more: easyMoney: Property lending market “extremely positive”
