The UK Government has decided that it’s time to “fix our broken housing market” and the latest response to the housing white paper consultation illustrates its determination to do so. In January, the Department for Communities and Local Government became the Ministry of Housing, Communities and Local Government headed up by the Rt Hon Sajid Javid, who has been very positive in setting out their objectives.

Chancellor Philip Hammond announced in November’s Budget that he would create new policies and commit the necessary funding to ensure the UK builds 300,000 new homes a year by the middle of the 2020s. The current run rate is less than 200,000, and has only just got anywhere near that level. In the recent Spring Statement, more initiatives were mentioned.

With demand for UK property outweighing current supply, the Government needs to embrace creative solutions to ensure more homes are added to the market. Theresa May recently hit out at house-builders to “do their duty” and placed further pressure on them to complete their projects and build on landbanks. As a result, this has allowed for a boom in the development finance sector as the specialist market continues to grow.

As the Government places blame on developers for the nation’s chronic housing shortage, it’s important to remember that alternative finance sources can offer property developers and investors tailored solutions to meet the specific needs of each project. As part of these proposed reforms, the Government should look to increasing market awareness of these funding products.

Members of the Association of Short Term Lenders are increasingly providing development funding in addition to their light refurbishment funding products. In Q4 2017, our members lent £319.4 million worth of development loans, highlighting the growing trend for property developers to rely on short term lending solutions.

The housing crisis continues to be high on the government’s agenda and Sajid Javid highlighted last year that he wanted to do more to support SME building firms. Increasingly these small developers are relying on short term funding solutions, because traditional forms of finance are often not available to them. Recent research by Worldpay showed that of 1,000 small business owners, almost one in three reported difficulties in securing business loans from banks, potentially halting their expansion plans altogether.

Alternative finance holds the key to funding expansion for many British small businesses, as access to funds from traditional lenders remains restricted, they need to be aware that alternative forms of finance are available and are providing solutions.

Benson Hersch, CEO of the ASTL

A version of this article appeared in the April edition of Business Moneyfacts