A step in the right direction

Since then, the policies announced in the Autumn Statement have been the first step in the right direction. The Chancellor revealed his plans to invest £2bn to help build 400,000 homes but this is only the beginning of the journey.

While this new housebuilding policy has been billed as the biggest construction drive since the 1970s, we still have a long way to go. Even this step remains unsteady, with some fearing developers will just alter their plans for existing developments rather than creating new homes.

Due to the growing population, the National Housing Federation estimate that a just under a million homes had to be built in England between 2011 and 2014 to prevent a housing crisis. But the construction industry failed to meet this target, only creating about 460,000 homes during this time.

The Markit/CIPS data for November showed the industry is yet to recover from this fall, with house building growing at its slowest pace for more than two years. So we are far below were we need to be, if the Government wants to meet its target of one million additional homes by 2020.
We need to find a way to pick up the pace. Planning changes should help here. As I mentioned in my last blog, allowing offices to be converted into homes without requiring planning permission will provide a much needed boost to the industry. In October, the Chancellor also announced that he is sweeping away planning restrictions on brownfield sites, which could be another big leg up.

But, the shortage of available finance is still weighing down developers, as they aren’t able to get the capital they need. High street banks are unwilling to give out high loan to value finance because they are worried about lending to the construction industry after the losses seen during the recession. The bridging market is relatively free of these fears due to the short-term nature of its loans. Developers need this efficient financing to make the most of the current opportunities available to them. Bridging loans offer fast finance providing the liquidity to rehydrate the industry on its climb.

But new developments are just one way of scaling the mountain. More needs to be done to bring empty homes back into circulation. Figures from the Department for Communities and Local Government show there are over 600,000 unoccupied homes in Britain and these cannot be allowed to remain unused if the crisis is going to be averted.

The main reason these homes are unoccupied is that banks won’t lend against them. This means that they can’t be reintroduced into the housing stock. This is where bridging loans can give another much needed helping hand. By providing short-term finance to the developers of these homes, the properties can be quickly repaired. This will allow the properties to re-enter the housing supply and increases the chances of the UK reaching the summit of its housing climb.