The UK housing market has faced the imminent problem of a housing shortage for some time and the problem does not seem to be improving. By the year 2020, many close to the housing market estimate there will be enough of a shortage that many who are in search of a suitable residence will have difficulty finding one. Builders are working to construct housing to prevent such a dilemma, but figures continue to fall short of the goal to eradicate the problem. The mortgage industry is now approaching the government and asking for support of small house builders across the country.

House builders constructing all size homes except large homes claim financing is the biggest hurdle they face day to day. Figures from the National House Building Council Foundation indicate one in five SME builders find financing is the biggest concern. It is the second biggest concern for another 18% of the builders.

Peter Williams of the Intermediary Mortgage Lenders Association commented on the latest data, saying: “The mortgage industry clearly feels that supporting development finance lending to SME builders and developers would help increase in housing output. Successive governments have struggled to meet house building targets, and the lack of solutions offered by the incumbent government in its Housing White Paper shows there is a need for new ideas.”

Williams added: “The IMLA is therefore calling on policymakers to explore how they can boost development finance lending. There are several ways through which this can be achieved. As well as promoting development finance, the government should explore a scheme that guarantees loans to SME builders. Our research reveals that lenders view the biggest obstacle they face in development finance is a higher risk of builder default.

“At the same time, builders report that accessing finance is an obstacle to increasing their output. By launching a guarantee scheme, or boosting lending to developers via the British Business Bank, policymakers could increase the flow of development finance and improve output in the sector.”