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Housebuilding is back on for UK developers as long as funding can be sourced

Housebuilding is back on for UK developers as long as funding can be sourced

 

First of all, we believe that it is great news that the Government is to put £2.3bn towards subsidising the 20% discounts to first time buyers for new properties. We are encouraged to see that it is likely this will be applied to all housebuilders in the UK, and not exclusively permitted for the larger ones.

However, in London it will further contribute to unaffordable price rises. Elsewhere across the country, it is going to be particularly effective where prices have not yet fully recovered from the recession and builders often struggle to make developments economically viable.

Regardless of this, housebuilders and developers in the UK have been hit hard by the banks’ lack of interest when it comes to lending them money. A fundamental thorn in the side of the otherwise rosy plan.

The next part of the housebuilding problem is to make sure finance is available for the SME housebuilders who have generally been neglected by the main banks, particularly if the development is outside the M25.

Assetz Capital is actively lending across the whole UK and looks forward to funding the growth in housebuilding likely to result from this policy, as well as the announcements on further speeding up and simplifying the planning system.

In fact, the founding deal done by Assetz Capital in 2013 was a development out of the ground. Helping to finance the 46 bedroom block of apartments in Nottingham wasn’t without its challenges, but it made it abundantly clear to us at Assetz Capital that ambitious builders with solid credit and business sense were missing out on vital funding from the banks. And in turn, potential buyers or renters were struggling to find appropriate accommodation.

As of Osborne’s announcement, this challenge – combined with the willingness of alternative finance - may be about to change.

Assetz Capital has over £500 million to lend and is keen to fund smaller housebuilders across the whole of the UK and help get Britain building again. These policies will help that happen, and begin to rectify the decades long undersupply of housing in the UK.

 

As with most forms of investment, peer-to-peer lending carries a degree of risk to your capital; in this case if the borrower is unable to repay their loan. At Assetz Capital, we seek to reduce this risk to our investors by taking asset security on every loan.

- January 15, 2016

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