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Small housebuilders lobby for Budget level playing field

Small housebuilders are pressing the government to ensure that they do not lose out to their bigger competitors on housing measures announced in the Budget.

The House Builders Association, which represents small and medium sized housebuilders, will meet the Homes and Communities Agency tomorrow.

It wants to ensure that small firms can benefit from the Help to Buy equity loan scheme.

Previous similar schemes, such as New Buy, which involved mortgage guarantees, and First Buy, which uses equity loans, have been criticized by smaller housebuilders as doing little for them while disproportionately benefitting larger, wealthier volume housebuilders.

Roger Humber, strategic policy adviser at the House Builders Association, said the application process to join the HCA’s list of First Buy providers was “too bureaucratic” and off-putting for smaller housebuilders.

He said: “I get the impression the HCA are aware of the problems [for smaller housebuilders with the past schemes] and they want to try to do something.”

He added that the new equity loan scheme is better for small housebuilders than the previous one because it does not require them to contribute equity, something that many firms could not afford to do.

But he added that it could be difficult for small firms to deliver the first batches of homes for the new scheme quickly as many would need to convince banks to loan them money for land.

Mr Humber thinks the mortgage guarantee scheme, which was also announced in the Budget, is unlikely to have a quick impact on the housing market. He pointed out similar schemes like New Buy were slow to attract buyers but the new guarantee scheme starts in January 2014 and runs for three years so has limited time to have an effect. He added that it was unlikely to have much of an impact on the housing market before 2016. “I cannot see how it can have a beneficial effect in the short term because it takes so long to get going,” he said.

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