Funding risk for government’s housing ambition

Research from Funding Options, an alternative finance broker, found that bank lending to property developers had more than halved in just two years.

Banks lent £16bn to developers in January 2016, compared with £34bn during the same month in 2014.

According to Funding Options, developers are encountering particular problems accessing short-term bridging or auction finance, needed for the early stages of a project.

“Property developers need finance to start projects and most traditional banks are unable or unwilling to provide it,” said Funding Options chief executive Conrad Ford.

Mr Ford added that “on current trends there is no chance” of the government meeting its target of building 200,000 new homes a year.

“This collapse in bank lending to developers cannot be helping the housing crisis – the more difficult it is for developers to secure finance the fewer properties will be built,” he said.

The research comes after one of the country’s leading housebuilders warned that housing supply was likely to struggle to keep up with demand.

In an interim management statement last Friday, Berkeley Group said that it welcomed the government’s “intention to address” the housing crisis but added that “supply may not respond positively to due to a number of inter-related factors”.

It said these factors included “complex and sometimes conflicted policies around planning and affordable housing”, as well competing demands on public land and a high-tax regime for property.