A total of 3,205 homes in London are on hold because their developers cannot raise the money to build them, property consultants CB Richard Ellis have revealed.
The firm also says that developers are freezing schemes because potential buyers, especially first-time buyers, cannot be sure of mortgages.
It says that lack of mortgage finance is not just hindering the sales market but has resulted in ‘many’ schemes with full planning permission not being progressed.
In Greater London, there are 15 schemes that have stalled due to funding constraints and a further six developments where planning is being reviewed to make them easier to fund.
Yet, says the firm, this pipeline could go some way towards satisfying the growing lack of supply.
Jennet Siebrits, head of residential research at CB Richard Ellis, said: “While some developers have deliberately halted development until the market improves, the principal reason for delays is funding, particularly in the case of large sites.
“Easing mortgage lending criteria for first-time buyers will go some way towards resolving the funding woes of developers and house builders by removing a significant barrier to home ownership.
“No one is advocating a return to a loose lending environment, but something needs to be done to enable people to access the residential property market.”
Comments
simon ftb: AHHH - so that's the answer! Developers cut their profit margins to zero. FTBs then buy up all the stocks of unsold houses.
Then what?
No profit for a developer means that they cannot finance the next site, so the supply of new properties dries up. No profits means no investors; and no lender will offer them finance as there is no return and no security.
No supply, by the way, leads to increased demand, which promotes increase in value. OOPS - you've just started the boom away again!
Nice one, pal. Thought you wanted CHEAPER housing?
What about my egg? Or chicken? I'm STILL no further forward...
First time buyers will be able to fund these developments if the house prices are dropped. Lower prices mean lower deposits and more likely hood of getting a mortgage.
The greed of developers is causing this pain not the mortgage lenders.
Dear Auntie.
Thank you for your response - but it leaves me more confused than before.
HOW do I help FTBs to feel less chicken? I have NO chicken - so they must currently feel none at all... IF I BUY A CHICKEN, then they will have a chicken to feel (if that floats their boat, of course...) so surely I will be ADDING to the problem, not reducing it?
Also, I did not say that I wanted to EAT EGG. There are a number of uses for an egg which do not involve consumption - you assumed the obvious. Obviously.
The end-use of the egg - or the chicken for that matter - is immaterial here.
On your thinking - reduce the chicken and the egg will land on your plate.
If only...
Yours, more confused but still desperately seeking answers,
D
Dear Desperate
The developers have egg on their faces
The FTB's are feeling chicken
The answer is clear, help the FTB's to feel less chicken and then the developers will be able to eat their eggs.
Yours, Auntie
Dear Auntie CBRE:
I have a problem. My bank have awarded me funding. It will allow me to purchase one chicken, or one egg - not both. The chicken could probably produce more eggs for me in the future - but I need an egg now. If I buy the chicken, I would not have the guarantee of an egg. If I buy an egg, I will never have the chicken.
What should I do, Auntie?
Yours beggingly
Desperatetobuildbutcantwithoutthesuretyofbuyers,
UK
Answers, on a postcard, please...