Government pressure on big builders giving development finance boost

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  • 05/04/2018
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Government pressure on big builders giving development finance boost
The government’s pressure on house builders to complete their projects and build on landbanks is seeing a boom for the development finance sector as the specialist market continues to grow.

Finance 4 Business noted it was also witnessing strong activity in the bridging market and that it would be another few months to see what impact new lenders were having on the sector.

As a result of the growth in demand for finance, the master broker said it had seen a record month in completed business in March.

“There’s a huge focus on development finance right now,” Finance 4 Business head of intermediary relations Dave Pinnington told Specialist Lending Solutions.

“The rhetoric coming out of the government with regard to large developers keeping hold of land is great for anyone within that development finance sector, because small to medium sized developers are really active.

“It’s all well and good the big builders having hold of that land and just making a profit on it as the prices go up, but there’s smaller to medium size developers who could build on that land.

“Something has to be done or some pressure has to be put on the bigger builders to say ‘Look, around 245,000 homes need building, if you’re not going to build them, someone else will,’” he added.

 

End of quarter impact

The bridging sector is also reporting strong positive sentiment with lenders and brokers alike targeting it for expansion in the next year.

This has been typified by the launch of several new lenders into the space since the end of last year, something which Pinnington notes is yet to have a full impact.

“We’ll always embrace and engage with new lenders but it’s too soon to say if they are going to shape the market, but we’ll know by the end of this quarter because the volumes are there and they will be given the opportunity,” he continued.

“It’s all about having the unique selling point that challenges the existing lenders proposition for the benefit of the client.

“The client counts so if we know a lender is doing a good job, their rates are competitive and they are providing a good service, another lender has really got to do something special to make us switch over because they are untested,” he added.

 

Record month

This high volume of activity has seen Finance 4 Business declare its record month in terms of lending value completed.

It used 19 different specialist lenders and completed eight transactions worth more than £1m, four worth more than £5m and two of more than £10m.

“We do most sectors of specialist lending, including portfolio buy-to-let, second charge, bridging, commercial and development finance, so as we’ve had a record month that is probably a reflection of the industry as a whole.

“It’s not one particular sector for us that’s outshining the other – it’s across the board and there’s no sign of it slowing up,” Pinnington concluded.

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