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Saving For a Space Ship

Barclays backs government’s £1bn loan scheme to diversify housing delivery  

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Barclays backs government’s £1bn loan scheme to diversify housing delivery  

https://www.offsitehub.co.uk/industry-news/news/industry-news/news/barclays-backs-governments-1bn-loan-scheme-to-diversify-housing-delivery/

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12th September, 2018

The Housing Delivery Fund, which launched today, is aimed at helping SME developers build homes for rent or sale to help drive a more diverse range of providers. Around two-thirds of homes are built by 10 companies.

Under the scheme, Barclays will contribute £875m and the government's delivery agency Homes England £125m to the total pot for borrowing.

The scheme is the latest to be unveiled as the government attempts to ramp up housebuilding to meet its target of 300,000 new homes a year.

Under the new fund, developers and housebuilders will be able to apply for loans between £5m and £100m over a maximum of a five years, with funding of up to 80% loan-to-cost on schemes and 70% on loan-to-value.

It is understood interest rates charged on the loans will be between 5% and 10%, but could be even lower than 5% depending on the scheme.

Speaking to Inside Housing, Dennis Watson, head of real estate at Barclays, said: "Where housing associations are undertaking commercial activity through their commercial arms, or in a joint venture with an SME developer, we would be very keen to hear from them. We think the flexibility and pricing (on the loan scheme) will be attractive for them."..

 

Edited by Saving For a Space Ship

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Hooray for Barclays.

Helping old people use the internet

Getting small buiders building houses.

Helping cripples walk.

Is there anything this bank cannot do?

Oh yes, raise new capital in a legal way that did not screw over shareholders and reward the greedy overleveraged Bob Diamond.

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1 hour ago, BorrowToLeech said:

Marvellous. Yet more money chasing the same amount of land. 

Don't be so cynical. This is supply side at least, and it looks like new land on the surface.

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Taxpayer gives banks money to lend to build houses that will be sold to taxpayers.

The interest on the money lent will be paid by the house builders, money they would intend to recoup through the eventual house sale to the end tax paying consumer. In other words the taxpayer pays (interest) in order to give money.

It's like you paying extra money to someone in order to.......give them money.

https://www.urbandictionary.com/define.php?term=double shaft

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1 hour ago, Si1 said:

Don't be so cynical. This is supply side at least, and it looks like new land on the surface.

It's a Gov scheme to provide £1 billion of debt - via Barclays - to developers.
How does that increase supply of land and/or housing?

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9 hours ago, guest_northshore said:

It's a Gov scheme to provide £1 billion of debt - via Barclays - to developers.
How does that increase supply of land and/or housing?

Err.

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12 hours ago, Si1 said:

Don't be so cynical. This is supply side at least, and it looks like new land on the surface.

The point is that I don’t regard this as a supply side measure, I regard it as yet another demand side measure because the shortage (whether a real shortage or an effective shortage due to landlord parasitism, that distinction isn’t relevant here) is a shortage of land. 

Given sufficient land, the market can easily meet the demand for buildings. The supply of buildings would quickly increase and house prices would fall to around about the cost of building a house which can in some cases be very low.  If land was available, I think a significant number of people would live in caravans rather than pay rent, and there are plenty of kit houses, and innovative solutions for mass production.  Foreign companies could enter the market, along with self-builders and entrepreneurs.

So the shortage is a shortage of land, but not just any old land, it has to be land that is close to jobs, schools, shops and so on.  That puts geometrical constraints on the amount of useful residential land that is available in practice, even in countries like the US, Canada or Australia.

In the UK, you could argue that government can, effectively, create land by granting planning permission.  That’s true, but it’s not quite as simple as that.

Firstly, the government can’t create land in the really important places, because those places are already used up.  There’s not much empty space in central London, for example.  

But OK, there are still places where viable space is available.  That space falls into two categories.

For land where planning is likely to be granted if permission is applied for, then getting planning permission is just another cost of development.  We have to conclude that the land is not used because it’s too expensive to be economically viable, for whatever reason. Otherwise people would buy it, spend the money to get planning, build houses, sell and profit.  This land is, for all intents and purposes, already part of the residential land market. The lack of planning isn’t relevant for the same reason a lack of buildings aren’t. And if planning was waived the land would just increase in price by the costs saved, and still wouldn’t be economically viable.

The other case is land where planning is never likely to be granted. This can be thought of as land that ‘doesn’t exist’ but could be ‘created’ by the state (obviously, these cases are just two extremes of a continuum).

Changing the planning rules to bring this land into use probably does constitute an increase in the supply of land.  Changing the planning rules here would be a good thing (it’d be good in both cases, but here I think it’d be good and effective)

The newly permissioned land would increase in value, of course, it’s not like we’d get residential land for the cost of farm land, but there’d be more overall. I am pretty skeptical as to how much useful land really falls into this category, without spending on roads and rail and other infrastructure, so I doubt that the overall fall in residential land prices would be dramatic, but I may be wrong about that.  Certainly some green belt land inside the M25 falls into this category.

However, all of this creating new land business is basically irrelevant because lending more money in order to buy land is still a demand stimulus, even if you were able to magic some new land out of thin air.  Just create the new land, there’s no need to throw extra money at it.

So, in summary:

0. The constraint on building isn’t a shortage of money it’s a shortage of useful land.

1. relaxing planning laws might decrease useful land prices but maybe not dramatically.  

2. This is totally unconnected to any sort of financial stimulus or loan.

3. Pumping more money into the land market will always push up the cost of land, and therefore housing.

 

Edited by BorrowToLeech

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14 hours ago, BorrowToLeech said:

Firstly, the government can’t create land in the really important places, because those places are already used up.  There’s not much empty space in central London, for example. 

 

Very true they could reduce demand, move ministries outside of London, not give housing benefit in inner London to people who don't work there etc. No pensioner credit to people who live in expensive homes etc.

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In the case of housing land is not required......people do and can live on top of each other.....millions live in high rise blocks, they choose to live high density on top of each other, technology means you can be in one place whilst live in a better place with space....brings what you want close to you, what you don't want away from you.;)

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  • 238 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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