Housing Growth Partnership

On 6 July 2015, Housing Minister Brandon Lewis announced that small house builders would benefit from a £100m fund to support their role in keeping the country building. Ref Gov.uk £100 million boost for small house builders.

The Housing Growth Partnership will invest alongside small builders in new developments, and will establish a network of builders to act as mentors and advisers.

The proposal is a result of the significant drop in the number of small house builders with the number of firms building between 1 and 100 units a year having fallen from over 12,000 to fewer than 3,000 in the last 25 years.

The government has matched a £50 million investment from Lloyds Banking Group announced in October 2014, to create the £100 million Housing Growth Partnership, which will be used to help smaller builders invest in new projects and develop their businesses.

The Housing Growth Partnership will invest alongside:

• Small and medium-sized house builders with a track record of land buying, design, construction, marketing and sales of new homes
• House builders who on average have had 10-100 single unit completions annually over the past 3 years.
• Residential development projects with a gross development value of between £0.75 million and £12 million.

Investments will be made in the range of £0.5 million - £5 million for each project and the partnership expects to make around 50 investments to provide an additional 2,000 homes.

Brian Berry, Chief Executive of the Federation of Master Builders, said: “There has been a sharp decline in the numbers and output of SME house builders over the past 8 years. One of the biggest obstacles these firms have faced is a severe difficulty in accessing finance. Without adequate access to finance they cannot bring forward the number of new homes they would otherwise…. The new Housing Growth Partnership will directly help to address this issue and the additional £50 million greatly increases the scale of what can be achieved.”

Andrew Bester, Group Director and Chief Executive, Commercial Banking, Lloyds Banking Group said: “The challenge of housing supply and affordability is one of the biggest issues facing Britain today, so we at Lloyds Banking Group welcome the government’s announcement of support for the Housing Growth Partnership, which will double the capability to support SME house builders. It will provide SME house builders with much needed equity to support residential development projects, to stimulate growth in their businesses and facilitate access to conventional property development finance.

The Royal Institute of Chartered Surveyors (RICS) however, questioned the amount of paperwork that will be generated and suggested that “…. The risk adverse nature to schemes such as these, alongside the lending at commercial rates, make it hard to distinguish these from private loans.” Ref RICS Housing Growth Partnership - support for small and medium house builders.

BSRIA Chief Executive, Julia Evans, said, “It is good news that this scheme will give help to SMEs but does it address the housing issue at large? Clearly, not enough houses – across the size spectrum – are being built. As ever, as far as BSRIA is concerned, this scheme will only work if we’ve got enough people to build the houses. The construction industry is currently suffering from a major skills shortage. We need to invest now in recruiting and developing the skills we are going to need to deliver the high volume of energy efficient houses required."

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