Brokers predict rising development finance demand

by: Heather Greig-Smith
  • 28/03/2017
  • 0
Brokers predict rising development finance demand
Over two thirds of brokers expect demand for development finance to increase in 2017.

United Trust Bank polled 230 finance brokers working in the field of development finance.

The poll found that 69% of brokers believe that demand for development finance from housebuilders will increase in 2017 whilst a further 27% expect demand to stay roughly the same. Just 4% of respondents expected demand to fall.

It also revealed that 63% of brokers working in the fields of asset finance, development finance, bridging finance and mortgages felt that the government was not doing enough to tackle the UK’s housing shortage and just 14% were confident that the government would overcome the housing shortage by 2020.

In addition, 74% of brokers described the outlook for their own businesses over the coming year as ‘bright’ with nearly a third (31%) predicting that the UK economy would grow beyond expectations in 2017.

Noel Meredith, executive director, United Trust Bank, said: “Based on our own start to the year, I’d have to agree with a majority of development finance brokers that there’s no shortage of demand for funding for new housing projects.

“There continues to be a strong desire from SME housebuilders to play a vital role in delivering the new homes the UK desperately needs and specialist lenders are keen to support them.”

He added that, despite uncertainty over Brexit and the longer-term health of the UK economy, the property market is fundamentally in good shape.

“Demand for affordable starter and standard family homes is strong in most parts of the country and this is still translating into price growth in most regions. Although developers must keep a tight rein on rising costs for materials and labour, those presenting sound proposals to build the homes people want and can afford to buy will find lenders happy to provide the funding,” he said.

However, Meredith said significant change contained in the Housing White Paper will probably come too late to meet the ambitious 2020 target of one million new homes set by government in 2015.

“Planning remains the biggest headache for most of the developers we deal with and unless the very first stage of the development process can be simplified and developers encouraged to build on suitable sites rather than discouraged, demand for new homes in the places people want to live will continue to outstrip supply.”

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