It often feels as though the perpetual housebuilding shortfall should be added to the list of those other sure-fire certainties of life – death and taxes – but while there’s still the faintest possibility that we could one day meet them perhaps we should hold off for a bit longer; after all, 2024 shows much more promise for house building than last year provided.
The current target for house building was set out in the 2019 Conservative Party election manifesto, which declared “300,000 homes a year by the mid-2020s”. The document, which outlined policy that Boris Johnson stood on (and comprehensively won with), also promised to build a minimum of one million more homes by the end of this Parliament; that gives the current Tory administration less than 12 months to deliver upon their pledge.
Official figures tend to refer to past quarters rather than the present and so don’t reflect today’s reality, but last July, Parliament’s Levelling Up Committee concluded that the government was not on course to meet the 300,000 homes per year target, although it added that the government could still hit the one million homes pledge.
Meaningful change
So how could it do this? Mainly by removing what it sees as unnecessary requirements on developers. The single most important way the government is trying to do this is through the Levelling Up and Regeneration Act, which was passed by Parliament in October 2023. It mainly concentrates on speeding up planning applications for both residents and local authorities, especially in the early stages of applications. By streamlining certain aspects of the process and reducing evidence requirements, the government has stated that planning applications should now be adopted in under 30 months.
In addition, under the new law, there is now a requirement for local planning authorities to create design codes for their areas. These give local residents the power to suggest and implement property redevelopment plans in their localities.
Other reforms include flexible national housing targets, the prioritisation of brownfield sites, the creation of a new Community Infrastructure Levy (CIL) and the introduction of penalties for developers who are deemed to be excessively slow. Put together, the government hopes these changes will radically improve house building figures.
Lending solutions
Of course, in the same way that developers need planning authorities to create and maintain a positive environment that doesn’t stand in the way of housebuilding, they equally need lenders to offer products that provide real solutions to their requirements.
For example, as well as offering development finance, at Alternative Bridging Corporation we understand that developers may need to move quickly when opportunities arise and don’t want to have to go through another application process to secure funds. That’s one of the motives behind our Alternative Overdraft, which offers a flexible drawdown facility to provide liquidity whenever a client needs it. There’s only one initial application process and nothing after that, allowing the facility to be drawn upon and repaid repeatedly.
It is available for two years and then subject to review and can be secured by first charge over commercial or residential and second charge over residential properties. Interest is charged on the balance outstanding and can be serviced or accrued. Loans are available from £250,000 to £3m and allow developers to secure the facility on existing assets, letting them rapidly draw down to pay for raw materials when they start a scheme, paying back the balance on the Alternative Overdraft as construction progresses and further payments on the development finance are released.
Another innovation for the market is with our Part X Property Finance product, a pre-consented part exchange facility designed to speed up sales and streamline chain breaks in new housing developments. Part X provides developers with the required finance to secure a part exchange deal with their property buyer. It also grants extra funds for minor refurbishments, allowing developers to improve the exchanged property, maximising its resale value.
At all times, developers need to be on top of costs and timings, and this is even more crucial in today’s challenging market. That’s why our Alternative Overdraft and Part Exchange are very popular right now, as developers look to take advantage of the government’s important changes to planning legislation.
Jonathan Rubins is director at Alternative Bridging Corporation
