Kickstart housing market through businesses

Richards said: “Give local bank managers the freedom to help break the lending bottleneck. Stop the ’Computer says No’. The relationship between banks and small business customers has broken down. The personal relationship is the only way to restore that. Going back is the only way of going forward.”

Richards and Bramzell believe the woes of the housing market are a direct knock on effect of the lending log jam for small businesses.

“Forget the debate about whether there should be 100% mortgages or not,“ said Bramzell, CEO of PropertyIndex.com. “If 99.2% of businesses in the UK are small businesses with less than 49 staff and the banks aren’t lending to them, then these companies are going to be laying off staff. Unemployed people are going to have big problems getting mortgages!”

Lord Mandelson unveiled a multi-billion pound loan scheme to help small businesses in January 2009 whereby the government will guarantee £10 billion of £20 billion in loans to companies with turnovers up to £500million. “Banks historically sit tight in times of recession and they are not doing anything other than that at the moment,” said Richards. “Banks need to decentralize more and divulge control to the managers as they did in the past when there was less defaulting on loans.”