Four in five property SMEs out of business – here's why

New research finds

LendInvest, the online property finance marketplace, is calling on the Government to revise its treatment of small and medium-sized property investment and development companies, and recognise the positive contribution they can make to resolving the UK’s deep-rooted housing crisis.

In a new report entitled Starting Small To Build More Homes: a blueprint for better policymaking for property SME market LendInvest brings together industry evidence for the first time to examine the root cause – and subsequent impact – of challenges faced by property SMEs such as constrained access to finance and distorted policy around regulation, taxation and access to land.

Five key findings in the report

• Four in five housebuilders have gone out of business since the last housebuilding boom

• By returning to the same level of market plurality as in 2007, we could build 25,000 more homes every year

• Small housebuilders were responsible for 3 in 8 of the UK’s new homes before 1990, today they only deliver 1 in 8

• The British Business Bank has yet to allocate funding for property firms

• The Homes & Communities Agency must lend a weighty £56m a month to achieve its target to supply £3 billion of housebuilding finance by March 2021

Christian Faes, Co-Founder & CEO of LendInvest, said: “Eight per cent of small-scale developers have gone out of business since the last housebuilding boom. 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.”