"Unfortunately, we know that these ambitious developers are often faced with a problematic hurdle - accessing the funds they need for the projects."
The housing shortage is once again a hot topic among politicians, with what would appear to be a consensus that across the UK we simply do not have enough homes. The trouble comes from working out how to resolve that situation.
One measure introduced in recent years has been permitted development. Through permitted development rights, property owners have been able to carry out certain works to their property without having to go through the planning process.
That has gone beyond simply adding an extension though; we know that there has been healthy appetite among developers and landlords to tap into these rights, converting and adapting the land or properties they own to deliver new units or simply better appeal to buyers and tenants alike.
Where can I find finance?
Unfortunately, we know that these ambitious developers are often faced with a problematic hurdle - accessing the funds they need for the projects.
After all, it’s rare that these investors have the funds to hand to pay for the work needed out of their own pockets. Instead they need to raise the funds, yet it’s a common complaint from brokers that many lenders are less than keen.
There are various factors which may act as an impediment for certain lenders when it comes to taking on these cases. For some it will be the more modest loan sizes that put the lenders off - the available margins may simply not be sufficient to justify the work involved.
In other cases, lenders may be wary about working with landlords who may have plenty of experience in property generally, but who may not have done much when it comes to development work. That lack of direct experience may cause some concern, with lenders preferring to limit their exposure to only those who have been there and done it on developments, with a more considerable record to lean on.
While this caution may be understandable, there’s no denying that it is acting as a barrier from development and conversion work that could make a real difference to our property market.
The truth is that there remains a significant demand for residential property, and there is good space that could be devoted towards new homes that isn’t being utilised properly, with landlords and would-be developers keen to correct that.
Finding lenders that want to say yes
It’s important to recognise that this wariness is not present across the entire marketplace. There are lenders who are more open minded, who have spotted the gap in the sector when it comes to supporting borrowers who only need to access more modest sums, or who perhaps do not have a comprehensive history of development.
Indeed, appetite can vary significantly between cases - it all comes down to the unique factors around a specific project and applicant.
The difficulty for brokers comes from navigating these waters, from trying to keep on top of those varying appetites and help their clients secure the funds they need.
Making that journey towards accessing specialist finance easier has been at the heart of what we do at Provide Finance from the very beginning. Our platform allows brokers to be swiftly connected with lenders who will consider the case, allowing them to work out the terms of the deal.
Borrowers of all kinds, particularly investors, want to move quickly when they have decided on a property project, but doing so is far from easy when brokers have to spend enormous amounts of time working through different lenders to try to find one who can consider a case.
Our platform speeds that whole process up, ensuring brokers only spend their time with interested lenders, and potentially opening eyes towards lenders who may not have been considered previously.
Working together to deliver homes
The housing shortage is not going anywhere - demand for homes will continue to be higher than the supply for some time to come. As a result, there will remain an interest from investors and developers in putting their existing land or property to use, to produce additional units that can meet some of that demand.
If brokers pick their partners carefully, and work with experts in the field, then they can avoid the frustration and disappointment of failing to find interested lenders, and ensure that their clients are swiftly placed with lenders who can help.
