The Intermediary Mortgage Lenders Association (Imla) has called on the government to help house builders.
These is a lack of new houses being built to fulfil the demand from homebuyers. Statistics published by FT.com in May 2017 show that it is estimated Britain needs between 225,000 and 275,000 new homes every year to keep up with demand. Currently, there are around 160,000 new homes built each year.
The National House Building Council Foundation has identified lack of finance as being one of the primary obstacles to building new houses.
Imla has said that lenders often regard loans to housebuilders as having a high risk and consequently will refuse loan applications. It urges the government to support property development loans by providing government-backed guarantees for housebuilding finance that will protect lenders from risks.
The executive director of Imla, Peter Williams, said:
“Imla’s research reveals that the mortgage industry clearly feels that supporting development finance lending to SME builders and developers would help increase housing output.”
In the current absence of government help, there are a number of finance options available to house builders. There are specialist lenders who will provide bridging loans and other finance options for builders. These tend to be smaller lenders who are willing to accept high risks associated with housebuilding loans, though they do charge higher interest rates.
The key to obtaining building finance is to use a broker who understands development finance and can source bridging loans or more long term finance solutions for new housing developments.