HOUSE BUILDING
ACCESS TO FINANCE
SMALL SITES AND LAND AVAILABILITY
The average score was 1.84/5 (lowest since 2017) when rating lending conditions to micro, small and medium-sized builders for residential development The most significant finance issue is ‘interest rates charged on new loans’ 53% say self-build/custom contracts are the most popular source of funding for a project 94% say it has become more expensive to build (53% say it’s 20% more expensive, with 1 in 5 noting it was 30% more expensive per site)
63% say the number of small site opportunities is decreasing (82% in 2022) 60% say obtaining planning for small sites is getting worse 59% do not believe NPPF requirements on local authorities to identify small sites is helping
WORKFORCE AND SKILLS
24% plan to grow their on-site workforce over the next year 12% plan to decrease their on-site workforce
FUTURE OF HOUSE BUILDING
57% will keep their workforce the same size 50% will upskill their workforce 36% hired one or more apprentices (40% in 2022)
68% are aware of the Future Homes Standard 55% think there will be increased costs due to the Future Homes Standard 71% are not at all confident about Biodiversity Net Gain (BNG) which comes into force this year 30% want to understand who to talk to about BNG
established organisations, such as Funding Circle, but Carr also suggests that developers speak to their accountants about whether they have a wealth management department in their business. Then there is Homes England, which has a lot more due diligence to ensure that it protects taxpayers’ money, but after a developer has met the requirements once, future applications are much more streamlined, Carr says. And the FMB is working with Homes England to simplify the process for SME developers. Importantly, Homes England is not the first place to try for funding, Carr says, but rather after initial attempts to receive financial backing have failed.
Carr says, because SME construction is often deemed too high a risk. Carr’s company had been with the same high street bank for 100 years and it suddenly dropped them. “Overnight, they just said, ‘We don’t want to deal with you. You’re too high risk.’ We’d never defaulted on payments.” Tier 2 banks such as Close Brothers – which sponsored the launch of the FMB and CLC’s joint housing developer report – and Aldermore are more inclined to support SMEs, “although they are a bit more expensive”. After that are tier 3 institutions that lend at a high repayment rate and carry a lot more risk. These are to be avoided, Carr explains, as “the repayment clauses will wipe out most of the profit you have”. An alternative option is peer- to-peer lending. There are
The statistics are from the FMB’s 2023 House Builder Survey
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Master Builder
www.fmb.org.uk
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