How smaller Scottish housebuilders shut out by banks could get slice of £500 million
“It’s shocking to hear the statistics of just how few homes are able to be delivered by these businesses, and highlights a real lack of investment and support available” – Stuart Heslop
Small and medium-sized home builders are “crucial” to addressing Scotland’s housing crisis but are failing to get the funding support needed to push ahead with new developments, property finance experts have warned.
Stuart Heslop of lender Together, which provides corporate, commercial and residential property financing, noted that since 2017, the proportion of housing in Scotland delivered by SME housebuilders has halved.
“Whilst larger housebuilders and developers are crucial to addressing the country’s housing shortage, we believe that the real key lies with Scotland’s SMEs,” said Heslop. “It’s shocking to hear the statistics of just how few homes are able to be delivered by these businesses, and highlights a real lack of investment and support available.”
He was speaking at an event in Edinburgh to celebrate the £7 billion lender’s 50th anniversary. Heslop has signalled the finance firm’s ambition to lend £500 million in Scotland.
Research from Together found that SME business owners and lenders based in Scotland are keen to invest an average of just over £1m into their business over the next two years, but industry failures and the government have held them back. The same study showed that 19 per cent believe that a lack of investment breaks and benefits from local and national government are creating barriers.
Heslop added: “So many issues in the market have caused SMEs to leave in droves. Rent caps, access to finance, supply and labour shortages; all have contributed towards making an environment that is difficult for SMEs to survive. As a result, we simply aren’t delivering the supply of housing needed. It’s imperative that lenders step up and help however we can.”
A study earlier this year from Together found that there were more than 93,000 properties sitting abandoned and derelict in Scotland, which could deliver nearly £18.5bn in value if redeveloped and planning regulations were eased, according to the firm. Furthermore, industry body Homes for Scotland has said in its recent report that “SMEs are crucial for brownfield delivery”.
However, Heslop said a key issue that still faced those smaller companies was access to finance.
“It’s clear that mainstream banks have lost much of their appetite to lend, and many are using restrictive ‘tick-box’ exercises to make lending decisions,” he noted. “Considering the turbulence of the last couple of years, many businesses may have historic credit issues completely out of their control, but that have since been addressed.
“However, too often these past issues make access to finance difficult for SMEs. We have seen a consistent move away from the relationship-based model of lending over the last decade with many high street banks; they no longer have dedicated relationship managers who know their customer’s business. They have moved towards remotely managing each case by call centres. This makes it difficult to make informed lending decisions, as the processes are far too constrained.”
He added: “We are committed to lending £500m in Scotland, and we will continue to do all we can to help open doors for our new and existing partners.”
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