“Labour’s housebuilding targets and planning reforms are welcomed, but pace, along with funding or incentives, will be needed to encourage SME developers to build on grey belt.”
These insights come from Richard Nowell, Senior Relationship Director at Secure Trust Bank Real Estate Finance, a leading provider of finance for property development and investment. He hails the government’s ambitions as positive but believes one of the five ‘golden rules’ for developing on grey belt land may lock SME housebuilders out of being able to regenerate these sites.
The grey belt refers to brownfield sites such as disused car parks and wasteland within parts of protected green belt land. Specifically, Richard says the aim to ensure 50% of the homes built on grey belt land are affordable housing will make it extremely difficult for local and regional developers to justify developing on these plots.
Richard said: “If I were to sum up the events since Labour won the election in three words, those would be ambitious, pace, and delivery. The reinstatement of housebuilding targets and intent to reform planning is ambitious from Rachel Reeves, and we now need pace from the Chancellor and our new Housing Secretary, Angela Rayner, to deliver on these plans.
“One of the key challenges I see is enabling small-to-medium sized housebuilders to rejuvenate these sites which include old car parks and petrol stations on the borders of our countryside. The costs of development are already sky high, and to effectively demolish existing structures for redevelopment will be another significant outlay that impacts the viability of a scheme. To then have 50% of the properties as affordable housing will further impact the feasibility and profitability for small to medium sized housebuilders, which may ultimately restrict grey belt development solely to larger or national developers.”
To overcome this, Richard believes funding and support are required from the government to subsidise construction costs for SME developers. He suggests that Labour’s ‘Freedom to Buy’ scheme, which sees the government act as a guarantor, needs to get off the ground as soon as possible to keep the property market moving.
“Funding and support will, I suspect, be required. This is especially the case for smaller enterprises which have lost substantial time and money from not being able to get their projects off the ground because of ever-trickier planning processes. Meanwhile, more people must be able to realise that dream of being homeowners so that the market stays buoyant. For that to happen, first time buyers also need help. The Freedom to Buy mortgage guarantee scheme is a great initiative, and we trust that details will soon be coming out soon about how this will be implemented.
“At Secure Trust Bank Real Estate Finance, we have years of experience working on grey belt schemes. One recent scheme saw us provide a £2m property development loan to Larkvale Homes, which turned an old, disused petrol station into a development that now houses nine luxury homes in the village of Cockfield in Suffolk. As property finance specialists, we stand ready to support developers with their real estate projects, and this wider movement from the government.”
For more about Secure Trust Bank Real Estate Finance and its residential development finance products and solutions, please click here.
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