Industry responds to Homes England and Newstead Capital loan fund announced yesterday
Housebuilders have cautiously welcomed Homes England’s new loan fund for SMEs but have warned it needs to be accessible and matched with planning reforms to boost delivery.
Homes England and asset manager Newstead Capital yesterday announced the launch of a loan fund to help small and medium sized (SME) housebuilders access development finance.
The fund, which is hoped to eventually reach £1bn over five years, has been described by Homes England as the “first ever to allow institutional investors to provide debt via private markets to SME housebuilders”.
The aim is to create a new asset class for institutions to invest. Peter Denton, chief executive of Homes England, has described access to finance for SME housebuilders as a ‘priority’
Brian Berry, chief executive of the Federation of Master Builders, said lack of funding is a “major barrier” for smaller housebuilders and said 29% of its members have reported that it has stopped them building homes,
Berry, reacting to the fund, said: “It’s good to see that more and more financial institutions are seeing SME builders as a positive investment.
“But government must match these efforts from the private sector by reforming the biggest barrier, the complex planning system.
See also>> Making SME builders great again
A spokesperson for the Home Builders Federation said: “We welcome initiatives to assist SME business for whom accessing finance remains a challenge.
“The key to the schemes success will be how well it is communicated to industry and how practically accessible and deliverable it is.”
Homes England, alongside the Greater Manchester Pension Fund and clients of listed wealth manager Mattioli Woods have committed £80m to the initial close of the fund.
The intention is to grow the fund to £300m through an initial capital raise and deliver £1bn of funding over the fund’s lifetime. It will provide loans of between £5m and £10m for typically 18 months, with the funds recycled upon repayment.
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Housing Today believes the government should not back away from its manifesto pledge of building 300,000 new homes a year by the middle of the decade. We badly need more homes and a lack of supply is a major factor in creating problems of affordability for both buyers and renters.
Over the next few months, Housing Today will be exploring potential solutions to help us ramp up housebuilding to 300,000. These are likely to, include different ways of working, funding asks of government and policy ideas that could boost housebuilding.
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