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Chancellor must improve access to finance for small builders

The Chancellor must take bold action in the forthcoming Budget to improve access to finance for SME builders if he wants to tackle the housing crisis, according to the Federation of Master Builders (FMB).

Brian Berry, Chief Executive of the FMB said “If the Government wants to solve the housing crisis, it must address the access to finance issue that local housebuilders continue to face. The Chancellor needs to commit to underwriting loans from banks to small house builders to get finance flowing into our sector once more. Nearly a decade after the financial crisis, difficulty in accessing finance remains a major barrier to small house builders increasing their delivery of new homes. Indeed, the FMB’s 2017 House Builders’ Survey showed little signs of improvement in this picture and if anything suggested slight deterioration in lending conditions. Assessments of lending conditions to SME developers were down slightly from 2016, the first fall in this measure since 2013. These difficulties make it much harder for existing SME house builders to flourish and grow and deter new firms from entering the market. This has resulted in a less dynamic house building sector that is less able to expand to build the homes we need.”

“If local housebuilders are to build Britain out of the housing crisis, the Chancellor must use the Budget to pull as many levers as possible in order to enable more finance to reach SMEs. One thing the Government can do is act to reduce the capital costs of lending to this sector for smaller specialist lenders. The initiative announced last week by the British Business Bank to extend its ENABLE Guarantee to house building by striking a deal with United Trust Bank is welcome. This type of Government action, because it pushes down the capital costs of lending to SME builders, will allow lenders to do much more of this. The Chancellor needs to back this initiative, encourage its expansion and explore all other options to reduce the risk and costs to banks of lending into this sector. If the Government wants to meet the ambitious housing targets it has set itself, it will need to ensure the long-constrained SME housing sector can once again access the finance it needs to meet the challenge of tackling Britain’s housing crisis.”

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Four month wait for good builders, research reveals

Home owners should book in their builder at least four months before their project begins or risk working with a cowboy, research from the Federation of Master Builders (FMB) has revealed.

The research also shows that an alarming number of consumers don’t ask their builders for essentials such as a contract or references when embarking upon a major piece of building work.

Key statistics from the research show:

  • More than 40% of builders need at least four months’ notice from consumers who want to hire their firm
  • 90% of builders say that the majority of home owners do not ask for a written contract
  • 80% of builders report that most consumers do not ask for an agreed payment schedule
  • Fewer than 10% of builders say that clients normally request to see vital insurance policies such as public liability or employer’s liability insurance

Brian Berry, Chief Executive of the FMB, said “If a builder is free to start work tomorrow, alarm bells should ring. Demand for building work is incredibly high at the moment and it should be no surprise that almost one in two builders need to be contacted at least four months in advance of when a client is looking to start a home improvement project. The workloads of builders have been rising steadily over the past two years and there’s no shortage of work. That’s why we’re urging home owners who are keen to crack on with their build or renovation projects to start getting in touch with prospective builders as soon as possible. Otherwise, they risk disappointment delaying their projects or worse still, working with a dodgy builder. So many building horror stories start with a client approaching a builder who’s free to start work sooner than the more professional builder who is really busy.

“There are also indications that home owners are leaving themselves vulnerable to problems in terms of how they approach their building work. The vast majority of builders say that most clients fail to ask for references and even fewer ask for a written contract on their work. There is a similar trend when it comes to asking for critical things like an agreed payment schedule and key warranties on work, as well as checking whether the builder has any external accreditation or recognition from professional trade association like the FMB. These protections really are essential to helping clients weed out the cowboys and mitigate against any issues that could crop up during the build. A quality builder will insist on these things and if they don’t, consumers ought to question why.”

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