News | Published March 31 2020

William George Homes MD concerned that housebuilders will become "forgotten again"

With the Bank of England cutting the mortgage base rate to 0.1 per cent -- the lowest it has ever been -- many people are talking about how the housing market has been affected by Covid-19.

At present, the housing market has entered a "stasis", according to trade publication Investors Chronicle, who say that the government have "put the entire property market on hold, encouraging buyers and sellers to delay transactions".

The Ministry for Housing, Communities and Local Government released new guidance last week which says that there is "no need to pull out of transactions", but that people should ensure they are "following guidance to stay at home and away from others at all times". 

Additionally, secretary of state for the department, Robert Jenrick, stated in a tweet that buyers and renters should "delay moving while emergency measures are in place".

While the consumer end of the housing market does seem to be "frozen", at least for the time being, Managing Director George Nixon of SME housebuilder firm William George Homes has concerned that not enough people will be talking about the effects for their sector.

"I fear we will be the forgotten sector," Nixon told The Parliamentary Review. "As was the case in the last recession.

"It would be unfair to say that housebuilders did not get support in 2008, but this was only the large listed companies.

"SME developers and housebuilders did not get any help, and many went to the wall. It has taken since then for many of these firms to get back on their feet, and to start the rise in the much-needed increase in housing.

"We now face a situation that is eerily reminiscent of those days in the late 2000s: a crisis but no help.

"The issue is this: many development sites do not and will not qualify for 'mortgage payment holidays'. They are not residential loans, and a lot of the borrowing is through non-traditional banks, taken out at high bridging loan rates.

"This obviously means that developers have large holding costs each month, with sites that are on total lockdown. The longer it goes on, the worse it will get.

"On top of this, we had an announcement on Friday morning that housing transactions and moving has been stopped in moth instances. Without government assistance, we will have a situation where sites go bust and the homes and employment to build these will disappear."

Nixon's concerns did not stop at the prosperity of the housing market, however. When asked about what Covid-19 meant for planning permission and the problems housebuilders face in that regard, he said that many departments should "cut firms a bit of slack".

"Many applications sitting in the planning offices are stalling thanks to the slow protracted process and the immense pressure on housebuilders to give very high percentages in affordable units.

"It would make much more sense if the planners were a little more lenient on certain aspects of the planning, helping firms like ours to push through these much-needed new sites and have these ready to build when we get through this crisis."

In summary, Nixon said that SME housebuilders would "go to the wall" if inaction regarding the property sector continued.

"We still have huge monthly overheads and significant commercial interest payments. The knock-on effect of this will be a collapse in the housing market brought on by builders going bust.

"If national stability is related to people feeling good about their housing situation -- as we have been told so many times before -- then the government failing to step in and assist firms like ours will make this whole disaster much worse for the country as a whole.

"Simply put, for the housing industry not to collapse completely, small and medium sized housebuilders need help."

For more information about William George Homes, you can read their best practice article here.

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The Parliamentary Review

March 31 2020

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