Bank lending to UK small and medium sized businesses (SMEs) in the real estate sector has fallen nine per cent in the last year from £13.9bn to £12.7bn.
According to commercial lender Ortus Secured Finance, lending to SMEs in the real estate sector fell significantly quicker than the level of overall lending to UK small businesses, which dropped two per cent from £58.2bn in 2016-17 to £57bn in 2017-18.
The London-based lender says that the lack of funding for property developers is helping to contribute to the current housing crisis with not enough homes being built.
In London alone just under 33,000 homes were built in the past year, compared to the 66,000 that Mayor Sadiq Khan says the capital needs.
Jon Salisbury, managing director at Ortus Secured Finance, said: “Smaller property developers are struggling to access the funding from traditional lenders to compete in a tough market.
“The fall in lending to SMEs in the property sector is indicative of the wider lack of financing available to smaller businesses from the high-street lenders across all industries as the economy rebalances.”
However, the Ortus data showed that there were three sectors where SMEs saw in increase in bank lending in the last year, including manufacturing which saw the greatest rise of 11 per cent to £6.3bn in the last year.
“Although a few key sectors, such as manufacturing, saw increased bank lending, more needs to be done to make sure financing support reaches businesses across all parts of the economy,” said Salisbury.
“Access to finance is crucial for smaller businesses to make the investments need to take their operations to the next stage, but without it many can see their growth stall and operations limited in scope.”
Source: City A.M.