Govt needs to tackle BSA issues if it is serious about 1.5m homes, lender says

Maslow, one of the region’s most active lenders, believes the government is not doing enough to facilitate the delivery of more housing and has failed to make good on its manifesto promises.

Speaking to Place North West at UKREiiF, Emma Burke, managing director of development finance origination in the UK and Europe at Maslow Capital, said the government has not outlined practical steps to boosting housing delivery and has failed to act decisively on delays to starts on site caused by the Building Safety Regulator.

“The government keeps saying, we’re doing things to unlock [sites for housing], but they don’t say specifically what,” she said.

There are various things straight off the bat that Burke thinks the government could consider to stimulate the housing market.

“Can they bring in a new first time buyers programme? Can they reduce stamp duty? Can they make lower income families more tax efficient? Is there a mortgage rebate for families on a lower incomes?  

“There’s so many things you could do,” she said.

The government would argue it has done plenty to pave the way for more homes including overhauling the planning system and proposing a wave of New Towns. However Burke believes there is an elephant in the room that needs addressing urgently.

The introduction of the Building Safety Act and the requirement for so-called high-risk buildings to pass through various gateways is having a damaging impact on the delivery of homes at a time when the government claims to be doing all it can do achieve the opposite.

Maslow has lent to a high number of schemes that would fall into this category in recent times, including a £64.2m loan for a 24-storey scheme in Manchester and £93.5m for a quartet of 15-storey buildings in Liverpool, a scheme called, ironically, The Gateway.

Burke hears regularly from her developer clients about the paralysing impact of the gateway process.

“What we’re hearing is their equity partners are scared of [the] gateway [process], and rightly so, there’s so much negative press,” she said.

The expectation was that gateway applications would be decided within 12 weeks, however, the reality has been very different, with some developers reporting much longer timescales.

In addition, the BSA has fundamentally shifted the way projects are designed and procured – more detailed design is required at an earlier stage than was previously typical, resulting in significantly higher up front costs for developers.

Equity partners will not fund this additional cost, but Maslow will, Burke said. The lender has started providing bridging loans to help developers overcome the increase in professional fees.

You would be hard pressed to find anyone in the property industry who thinks the BSA in general is a bad thing and Burke is no different. However, she is of the opinion, like many others, that the gateway process is seriously flawed.

“It’s very difficult for any developer to say that the changes in the regulations are a bad thing because they’re not, they’re a good thing that the industry needed.

“But what we now have is this onus back on the developer to submit all of this information but there is nothing coming back from who it’s been submitted to.”

Starts on site fell 40% last year as a result of issues around the gateway approval process, Burke said, a figure that flies in the face of Labour’s stated ambitions.

Does she think the government is serious about the growth agenda and 1.5m homes?

“It is a nice thing to say to get voted in,” she said. “If you want to deliver 1.5m homes, focus on gateway.”