Challenger banks turning focus on service to grow development market – Mantra Capital

Founders of the broker attributed the growth in the development market to the sharp rise in small and medium-sized challenger developers, the higher risk tolerance of challenger banks and the increased value found outside London.

The broker also noted that this greater availability of capital had helped it achieve record volumes of business in March and over the first quarter of the year.

Mantra Capital managing director Nick Neophytou (pictured) noted that with the supply deficit so extreme, the development market was seeing unprecedented activity levels and the service provided by new lenders was backing this up.

“There is no shortage of experienced developers hungry to build, and equally a raft of lenders that are ready and willing to provide finance,” he said.

“At the current point in time the challenger banks and niche lenders are particularly active. We are seeing a definitive shift away from price and product towards speed and certainty of execution, which is where the challengers come into their own.”

Regional hotspots, record lending

Nimesh Sanghrajka, also a managing director at the brokerage, added that there was a greater interest to build outside London.

“The UK’s development map is changing fundamentally,” he said.

“Developers and investors are increasingly looking beyond the capital in search of better value, with current hotspots including Birmingham, Bristol, Edinburgh and Peterborough.

“While the high street banks certainly haven’t gone quiet, there is a growing synergy between challenger developers and challenger banks that could have a material impact on solving the UK’s housing crisis.”

The busy market saw Mantra Capital arrange £62m of loans for its clients in March, up 94% compared to £32m in the same month last year.

And this was also borne out over the first three months of the year with £87m of loans in total completed, compared to just £62m during the same three months last year, an increase of 40%.