LendInvest is calling on government to revise its treatment of small and medium-sized property investment and development companies, and recognise the positive contribution they can make to resolving the UK’s deep-rooted housing crisis.
In a new report entitled Starting Small to Build More Homes: A Blueprint for Better Policymaking in the Property SME Market, LendInvest brings together industry evidence for the first time to examine the root cause – and subsequent impact – of challenges faced by property SMEs such as constrained access to finance and distorted policy around regulation, taxation and access to land.
In the government’s own housing strategy, the important role of property SMEs was recognised, but the white paper did not introduce measures to accelerate opportunities for small property developers, regenerators and professional landlords to scale-up and compete with the market-dominant housing giants.
Where small housebuilders were responsible for 3 in 8 of the UK’s new homes before 1990, today they only deliver 1 in 8. Industry experts suggest that even by returning to the same level of market plurality as in 2007, we could build 25,000 more homes every year. That number is the total intended to be unlocked over the course of the entire parliament with the government’s own Home Building Fund. In order to deliver this, the Homes and Communities Agency administering the fund, must deploy a weighty £56m a month to reach the target by 2021.
The report illustrates the social and economic contributions that property investment and development SMEs make locally and nationally, and makes recommendations to end a protracted preference by government for muted support of this industry sector.
As government pursues an ambitious industrial strategy, with a central focus on unlocking new UK infrastructure to support economic growth and productivity, the recommendations made in the report could not be more timely.
Recommendations to government in the report include:
- Apportion a quota of public land for sale only to SMEs
- Simplify tax burdens to help property SMEs reinvest capital into business development
- Mandate state-backed finance bodies, like the British Business Bank and Homes and Communities Agency, to begin or accelerate the provision of funding to property SMEs
- Initiate a strategy to boost competition by enlisting cooperation of the offices of the Housing and Small Business Ministers