Housebuilders benefit from imbalance of supply not meeting demand, says Go Develop chairman Holden

Brian West

26 January 2018 10:14 GMT

The housebuilding industry will always have its challenges, but one overriding benefit to housebuilders is the half century imbalance of supply failing to meet demand, a unique advantage from which few other sectors benefit.

That’s according to Mark Holden, Chairman of Go Develop, who says the Government has used many levers to get things moving and as such the industry is on track to deliver one million homes by 2020. He adds:

“There remains a quiet building revolution, more recently trumpeted as EPC records confirm 211,000 new homes were completed in the year to June 2017, up nearly 50 per cent in three years.

“Help to buy remains the stuff of dreams for many National Housebuilders, amply rewarded in the last budget with another £10bn and major support in SDLT changes.”

Mr Holden contends that forward indications bode well, even with an indebted and over borrowed consumer, struggling with regulatory and lender red tape headwinds. He added:

“Across many parts of the country, new housing is almost meeting demand, especially where housing affordability is better than average, but in the South East, a significant increase in supply is needed to ease affordability pressures.

“Land to GDV ratios in the South East are still very toppy, compounded by unique constraints of environment and landscape destinations, this imbalance is unlikely to change anytime soon. It is estimated there was a shortfall last year of 104,000 homes where demand was highest, but affordability was stretched and the vast majority of this was the South East.”

He says that for more than 40 per cent of households to be able to afford and buy a home in the South East, there would need to be substantial stock availability at a maximum price of £250,000 and this is unlikely to happen. He continued:

“Those in Government know well that if they are to be re-elected then the electorate needs to be garnered and the best possible way to do this is to get many of this electorate on the housing ladder.

“We still need a new catalyst if we are to build the 300,000 homes per year that are required in England alone to ease affordability pressures for home buyers and there remains a near oligopoly of just six (yes really) controlling nearly 60 per cent of all new built homes that come to the market.

“So it’s all about supporting the independent Housebuilder, hit hard by limited finance, inflation and skills shortages to ensure we have a positive and diversified supply base.

“Go Develop provides 100 per cent full development funding covering everything from land and build to stamp duty and soft costs – no fees or deductions.

“Developers have absolutely no outlay - not a penny, and there are no set spreadsheets or ‘computer says’ mentality. Instead, a joint venture partnership is set up ensuring the developer takes home the lion’s share of the profits once the project is completed and sold.

“With decades of experience in property, the Go Develop team offer expertise in legal, surveying, marketing and accounting and will happily burn the midnight oil so that the developer doesn’t have to. The criteria are kept simple, with a focus on experienced new build developers, preferably with planning in place and a target GDV of £2-15m.

"There needs to be a margin of 25 per cent on GDV pre-finance and projects tend to be no longer than two years with competitive selling prices for the postcode. With over 1,000 units being built nationwide, Go Develop are offering an innovative solution for housebuilders and developers in needs of funding.”

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