Unleashing the power of SME housebuilders
Back in the 1980s, more than 40% of all new homes were delivered by SMEs. Currently it is less than 12%.
The majority of our homes are built by the top 20 housebuilders who are focused on a particular type of development opportunity that will inevitably require scale. The housebuilding sector historically has always had a strong SME cohort, however their impact has been diminishing over the past few decades.
Unlocking the potential
- Homes England has identified unlocking the potential of SMEs as one of its key objectives (HE Strategic Plan 2018-2023)
- SMEs need to be financially supported in a way that recognises they do not have dedicated departments available to fill in long winded forms
- Funding costs need to be competitive and not penalise the SME against the larger organisations
- Using the financial guarantee provided by housing site Sales Guarantees.
New entrants
- Difficulty for start-ups to attract appropriate funding which tends to encourage an inefficient and protracted business model through organic rather than structured growth
- Venture capitalists can find construction a relatively unattractive sector when compared to technology for example
- Initial support from new models addressing the barriers to entry is having a real impact on overcoming these historic problems in the SME sector.
Source
Housebuilder Magazine – November 2021
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Transforming development finance
for housebuilders, lenders and brokers
