A survey of small and medium-sized residential developers by TrustedLand has found that while 37% of its members believe coronavirus will have significant effect on their business, almost a third said they believed they could adapt to the challenge created by Covid-19 using diversification, advice from peers and the government’s £330bn care package.
Ben Keenan, partner at London-based Broadwing Homes, said comprehensive communication and consideration was the biggest action needed for the sector right now.
“In a dizzying sequence of global events, Covid-19 has quickly soured what was looking like being a period of renewed optimism in UK real estate,” said Keenan. “All businesses need to adapt quickly in order to mitigate the resulting financial impacts. At Broadwing, we are taking a few key measures to weather the storm.”
He added: “Communicating with lenders and build teams will be vital. In times of great uncertainty, financial institutions often look to conserve cash and de-risk their portfolios. If that results in a funding squeeze on your projects, it can derail progress on site and compound the risks for all concerned.”
Romey Chopra, of Berkshire-based Chopra Property Group, said business was now all about cash preservation and contract reviews.
“We have initiated a financial plan to adjust our position in light of the current climate. The double cut in base rate, economic stimulus from the government and the willingness of the mortgage lenders to provide a 90-day holiday period have all contributed to our mitigation strategy of consolidating cash flow,” said Chopra.
“We have reviewed contractual positions on all existing contracts in anticipation of an extension of time, with restriction of movement of goods and people inevitable. Provision will be negotiated which will deal specifically with the consequences of these events.
“Unlike Brexit, Covid-19 will have a far more reaching effect on the housing market. As developers we have to quickly adapt to the socio-economic changes that will invariably happen in the next 12 to 24 months and align our strategies accordingly to a “brave new world”.
Advice from peers was the third most requested assistance identified in TrustedLand’s survey, with a number of respondents saying that the market and future economy were their biggest areas of concern now.
TrustedLand chief executive Alex Harrington-Griffin said: “Seeing the various online groups come to life to support, guide and reassure their peers and fellow members has been amazing to see, and an attitude of togetherness that I think previously people wouldn’t have expected, whether it’s discussing deal progression or sharing team safety advice.”
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