GOVERNMENT policy on small- and medium-sized enterprises (SMEs) is mismatched when it comes to the property sector, LendInvest has warned.
A report by the online mortgage lender, which is part of the Peer-to-Peer Finance Association, found that four in five SMEs in the housebuilding sector have gone out of business since the last building boom in 1988.
Citing Federation of Master Builders (FMB) and Home Builders Federation (HBF) data, LendInvest says small housebuilders were responsible for three in eight of the UK’s new homes before 1990, but today they only deliver one in eight.
Government figures show that 262,490 homebuilding projects were started in 1988, compared to 172,490 last year.
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The report warns that while SMEs are generally supported through tax incentives such as Enterprise Investment Schemes and finance boosts from the British Business Bank, smaller property firms – including builders, landlords and developers – suffer from extra stamp duty charges, tough credit conditions and the removal of several tax perks in the buy-to-let sector.
Christian Faes, chief executive of LendInvest, is calling for better access to finance and support for property SMEs from state-backed bodies such as the British Business Bank, as well as providing a quota of public land to smaller firms and simplifying tax burdens on the sector.
“80 per cent of small-scale developers have gone out of business since the last housebuilding boom,” he said.
“That’s an appalling statistic. It’s meant less employment, less entrepreneurialism and fewer new homes on British streets where large-scale housebuilders didn’t pick up the slack.
“Decades of successive governments’ under-investment and muted decisions, coupled with a planning system that defaults to favouring larger sites over small ones has cumulatively left UK housing in a dire situation. The housing white paper showed us there are no quick fixes, but incremental improvements can and must be made.
“If we’re going to encourage people to forge careers in property, they need to know that their businesses will be treated the same as start-ups and scale-ups in other productive sectors. Failing that, we risk losing another generation of property entrepreneurs. That mustn’t happen. It’s time to mix small-scale housebuilders into the debate and give them the chance to help get Britain building.”
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John Slaughter, director of external affairs at the HBF, said larger developers dominate the market.
“Housing supply has increased 52 per cent in the past three years, but the majority of that has come from larger companies, he said.,
“We need to implement measures that can help get SMEs building more too if we are to fully address our national housing requirements.”
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