Together We Build, Build, Build

Posted by CrowdProperty on 10th June 2021 -

Around this time last year, Boris Johnson exclaimed: “We will build, build, build… build back better, build back greener, build back faster.” An exciting rhetoric for anyone involved in building physical assets… but as always, the challenge is in the implementation. The sentiment was right – the principles of Keynesian economics, which advocate increased government expenditures and lower taxes to stimulate the demand-side of the economy, has proven itself in many economies in their toughest ebbs, especially if this can be mirrored by private sector investment.

The planning system has been a major barrier for SME property businesses building more homes in this country and over the past 12 months we’ve seen government initiatives such as the Green Home Grant scheme, new planning laws which remove “unnecessary bureaucracy to give small business owners the freedom they need to adapt and evolve”, and announcements of new permitted development rights (PDR) including construction of up to two storeys above existing buildings to create new homes and conversion of vacant commercial properties to residential use. The stamp duty holiday has then sought to tackle taxation barriers.

This is a very real opportunity, and maybe the imperative, to finally build enough homes in this country, which is so vital in many regards for the economy. Not building just one home not only exacerbates the housing under-supply issue but also means that £100,000-£200,000 less is spent in our economy on labour, materials and services. 100,000 fewer homes costs the economy £10bn-£20bn.

CrowdProperty's research, which includes the largest survey ever conducted amongst SME residential property developers to give this important segment a voice, shows that 42% of SME property professionals believe that ‘better sources of funding’ would be the most beneficial driver of building more homes going forward. Large housebuilders also feel this pain (although to a lesser extent) but there are a finite number of large sites in this country to develop. So, the secret to improving housing output is empowering the entrepreneurial SME residential property developer segment but that needs the many barriers that have significantly increased over the last decade to be tackled.

We talk quite a bit about the remarkable decline in SME developer housing output (from c.60,000 homes in 2008 to c.20,000 in 2017, in a context where the country built only 200,000 in each of those years - considerably less than the 300,000 required) so for the SME segment to be a material part of the answer, not only do we need to significantly increase output but also reverse this declining trend – tackling the fundamental barriers that have been behind it.

So whilst the Government has been pulling planning and taxation levers, building the best SME property project lender in the market was the genesis behind CrowdProperty - addressing the many pains associated with traditional sources of funding that have progressively choked this segment more and more over the last decade. There’s never a more powerful raison d’être for a business than solving fundamental market pains that the founders have felt personally, and know how to solve, having been in the shoes of developers themselves.

Extensive hands-on property investment and development experience are key to fundamentally understanding the needs of SME developers – for example:

-       the importance of selecting the right project as efficiently as possible (and understanding which projects to pass on);

-       getting the best deal by delivering speed and certainty to vendors, and

-       the ability to keep the site motivated through speed of assessing and releasing drawdowns

These are just three examples of the benefit of working with property people for funding: we know what’s important to developers and the project; we understand how market demand is changing and the funding products needed; and we deliver with the speed, ease, certainty and transparency you should expect from a funder.

Sources of capital are quite rightly a concern to many when looking for project finance – no one wants to have funding lines cut part way through a project. The pandemic revealed that most funders in the market were exposed with single sources of capital - even those with multiple sources were exposed as those sources had exactly the same underpinning exposures to equity market volatility and lending attitudes.

CrowdProperty’s uniquely diverse sources of capital, across multiple major institutions, funds, family offices, HNWs and private investors, has proven to be a sustainable and reliable source of finance through the toughest of economic backdrops. With perfect reliability of funding for property developers throughout Covid-19, CrowdProperty’s unique ‘Property Finance by Property People’ proposition and reputation as the best specialist property development lender in the market has further step changed applications for finance, now running at over £250,000,000 per month.

CrowdProperty has funded the development of 1,438 homes worth over £270,000,000, originating over £160,000,000 of agreed facilities, lending £133,000,000, and unlocking over £120,000,000 of spend on labour, materials and services in the UK economy.

It has never been more important to work directly with a lender who understands a developer’s vision and needs – in our case, backed by technology for efficiency and expertise for effectiveness. A nimble, rapid and value-adding approach means developers have a higher chance of success in their project and grow their property businesses quicker – benefiting all parties.