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Government launches scheme to help fund small builders

British Business Bank guarantees £1bn to banks that lend to small builders in an effort to boost house building. 

 

Small builders are set for a boost as the government launches a scheme to fund homebuilding developments, and boost the construction trade. The state-owned British Business Bank will make up to £1bn of guarantees available to banks that lend to small builders. This will reduce the amount of capital these banks are required to hold against such small builder finance, encouraging additional lending to smaller developers.

The BBB has struck deals with specialist lenders to help with small builder finance, but this is the first time a dedicated scheme has been set up for the industry.

The chancellor pledges to help small and medium-sized builders in last autumn’s budget in an effort to hit the 300,000 new homes every year. This bid to create an abundance of new homes will increase the job market for a builder working on these smaller developments. The scheme is open to applications from banks where at least 80% of the loans are to developments in England. (Housing policy in Scotland, Wales and Northern Ireland is developed to their governments.)

How will this affect the industry?

The amount of homes put up by small builders has halved since the late 1980’s many develops blame this lack of construction to financial matters. This could be due to the fact that banks became more risk-averse after the financial crisis around 2008. This then leads to them not providing money to smaller developers and down the line, this equalled to a defecate in the construction of homes.

This new scheme, once implemented could equal changes in the market, for small time builders and will increase the overall sector in many ways, new job opportunities will arise and people already in employment in this sector will see a change in the volume of contracts and general construction. To reach this target of 300k there will need to be an abundance of available tradesman of all types.

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