How are developers navigating the housing crisis?
We all know the UK needs more houses to rectify the current housing shortage. Three million in 20 years to be exact. With new build dwelling starts showing no change between 2017 and 2018, and completions only rising by 1%, the momentum is not off to a great start.
While Brexit has a part in navigating the housing crisis, in many ways it boils down to something much simpler. The main problems for UK property developers are lack of finances and lack of land. Without the money or available land, developers find themselves stuck, unable to produce new builds at the rate we need. The country then falls behind with its housing goals and the crisis only deepens.
In a survey, only 4% of total respondents from the housing sector put Brexit in their top three biggest factors preventing their organisation from building more homes. This is compared to 20% who selected lack of finance and 86% who chose the availability of land. With this, it’s clear to see that while Brexit is causing some uncertainty, there are more pressing concerns for developers in creating new property.
Lack of finance
After the 2008 banking crisis, traditional lenders have become more wary of risk, reducing the amount of money they are willing to lend out.
For developers, this means less likelihood of getting the money they need to start developing. When they don’t get the money, chances are they’ll miss whatever opportunity they found and must start the search all over again. This also means developers have to get funding on a case-by-case basis – a less economic way to operate.
To combat this, developers are looking for alternative ways of securing the finances they need. One option is debt investment, in which private investors provide the funds. Able to help with the housing crisis while also securing financial gain, this option is attractive to both the developer and the investor.
Lack of land
Halting the UK’s housing development in a similar way is the lack of land available for developers. They might be able to get over the funding hurdle but soon find there’s another one in their way.
There are plenty of reasons why someone may be sitting on vacant property and still be hesitant to sell. Joint ventures are one way around this. By partnering up with a landowner, who stands to make a significant financial gain, developers are able to unlock previously unavailable land.
These are just some of the issues developers are coming up against. Unable to get the finances or land needed, many developers are struggling. If issues like these persist, it’s unlikely that we’ll be able to do something about the housing shortage. But, for now, all we can do is keep on building.
At Agent Hub, our system can help to broaden your connections and contacts. Able to network with others in the property industry from all over the country, you could increase your business prospects and find solutions for issues you often come up against. If you’re interested in hearing more about what our system can do and what we can offer your business, contact us on 0203 637 6811.