As workloads are driven up by rising demand for new homes, JOHN HEWITT suggests now is the time for SME builders to progress their schemes
Small house builders are seeing encouraging signs of growth in activity and employment, according to industry feedback which also points to the important role the sector will play in helping the government meet its target for new homes.
The Federation of Master Builders said more than half (55%) of respondents to its State of Trade Survey for the first quarter of this year – the only survey of its kind to track the experience of SME construction firms – reported workloads growing at their fastest pace for 10 years. Scotland in particular was seeing a high level of enquiries from prospective purchasers.
This focus on the importance of SME builders in Scotland is further supported by the Scottish Government’s new Help to Build fund which is focused on SME builders and is being used as a means to diversify the housing market and reverse the decline in SME construction levels. Without the ongoing activities of SME firms, the Scottish Government is unlikely to achieve its target of building 300,000 homes a year.
Availability of viable land to develop is one of the stated main factors in hampering the construction and development of homes, and it is hoped the Self and Custom Build Action Plan will go some way to addressing this, as local authorities must allocate more small sites in their local plans for incremental development.
The availability of suitable development funding is cited as another key issue and is largely being addressed by several factors including the launch of the new Recovery Loan Scheme, to replace CBILS and BBLS.
It is generally accepted that this new product will play a key role for any borrower involved in residential property development. Combine this with the growing number of lenders committing to enter the Scottish Development Finance arena, and relief appears to be coming across the horizon for SME Builders. Now is the time to capitalise on it.
Even the choice of product types is expanding, with mainstream funding being replaced with development bridging. It is only by speaking to the right brokers that any borrower can be confident they are seeing what is available across the whole sector.
With all the new avenues opening up to borrowers, now is the time for any business owner to discuss this with a properly experienced development finance broker. This will ensure there is sufficient funding available to help fulfil the business’s potential in as efficient and effective way as possible. Often, the broker will also bring other experiences to the relationship that will help any developer overcome the unexpected.
John Hewitt is managing director of Nummus, a specialist financial services consultancy focused on meeting the financial needs of SME developers
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