Paragon grows development finance proposition with Build to Rent offering

  • 07/11/2023
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Paragon grows development finance proposition with Build to Rent offering
Paragon’s development finance division will offer up to £35m to support the acquisition and development of institutional-grade Build to Rent (BTR) schemes.

BTR are homes developed and built specifically for the rental market, and this area of the market is a growth sector. It is usually forward-funded or a forward-purchase scheme.

Data from British Property Federation show that 90,000 BTR units have been delivered to date with a further 50,000 plus units in development.

The BTR market is extending to single-family housing, accounting for 10 per cent of the marketplace.

The lender’s proposition will “support the lifecycle of BTR schemes in established residential locations in cities and large towns across the UK, including site acquisition, development, the letting of a completed scheme and a short-term stabilisation facility”.

It also “supports the developer in taking the opportunity to benefit from the potential growth in the rental market through the development term by retaining the scheme after it is completed”.

Neal Moy, managing director of Paragon Development Finance, said: “The BTR market is a natural extension of our proposition to support experienced residential developers. The sector has continued to enjoy strong growth and complements the buy-to-let market in offering a good quality home in the private rented sector.

“We are offering something different to the typical BTR funding model where the developer holds most of the development risk but has limited upside benefit. We believe that the developer can benefit by retaining the scheme post practical completion, enabling them to deliver stabilised income-producing institutional-grade mid-size BTR schemes.”

Simon Dekker, senior relationship director for Paragon Development Finance added: “The housing market in the UK continues to evolve, with the expanding BTR market providing an increasing alternative to the traditional build-to-sell model as the demands of the UK’s population changes.

“We have supported the purpose-built student accomodation (PBSA) market over many years and believe that now is the right time to add our experience and support to the BTR sector.”

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