According to TAB’s chief executive Duncan Kreeger (pictured) there is a “gap in the market” in the under £5m segment, which is currently “underserved” by current lenders.
Kreeger explained: “Fifteen years ago, this space was dominated by the big banks. That’s all changed now – high street lenders started getting cold feet about development finance after the sub-prime crisis.
“Covid-19 has been the nail in the coffin. The few banks that are still lending are relying on old, outdated technology and systems. They’re slow and you get the impression they don’t really want to do deals.”
He said that there was room for a “trustworthy, transparent lender capable of working to tight deadlines” and that it would be an opportunity to help return customers where it has pre-existing relationship with them.
He added: “Given our pace and the fact we will not be competing with established brands, I like our chances of quickly making a big impact on the market.”
According to research from broker firm Mortgages for Business earlier this year, the number of development finance lenders has increased by 52 per cent since 2016 with almost 40 lenders have starting to offer development finance or coming to the market in the past five years.
Around 15 per cent of lenders are banks in the development finance space, with more alternative non-bank lenders representing a greater share of the market.
TAB’s property development finance is short term-funding for projects based in London and is aimed at unlocking capital to help ground-up developments, conversions, heavy and light refurbishments and finish and exit property projects. Its development finance product start from 0.9 per cent per month, with a minimum loan of £250,000 and maximum loan of £10m.
The loan to gross development value is up to 65 per cent, and term is maximum 24 months and the exit fee is one per cent of gross development value.