"I think where the pandemic has changed behaviours is the type of organisation a property developer or broker choses to work with."
FR: You recently joined Paragon as deputy MD of development finance – tell us a bit about your previous experience and what your goals are in your new role?
I have been in the property finance sector for pretty much my whole 37-year career in financial services. Historically I have worked for the main UK clearing banks and some overseas commercial banks but most recently with the likes of RateSetter and Shawbrook Bank. When the opportunity came up with Paragon Development Finance, I jumped at it.
The team has forged a great reputation for delivery. It has also recruited well, adding good quality/experienced relationship directors and support staff, and it has established an attractive product range. Being part of the successful and well-capitalised Paragon Banking Group, gives us the financial strength to grow our lending book and support even more SME developers who are delivering the new homes we need.
I’m looking to help development finance achieve its ambitious growth and that includes looking at the expansion of our regional lending and to potentially lending into some new products.
FR: What is Paragon’s plan for its development finance offering in 2022?
I think you’ll see more of the same in terms of our core product offering. We are keen to support experienced property developers with finance ranging from £400,000 to £35 million on schemes across England and Wales. We successfully grew our lending by 33% in our last financial year to £510 million and we want to continue to grow our loan book in a sensible way.
As referenced, we will be looking to grow lending outside of our core southern markets, plus we are looking at how we can better support other sectors including purpose built student accommodation where we have recently enhanced our product offering.
FR: How will the pandemic continue to shape demand for alternative finance?
For our market segment, the alternative finance market has always been the route most SME developers go down. Our competition is often not the clearing banks, it’s with specialist providers that understand the challenges of property development for SMEs.
I think where the pandemic has changed behaviours is the type of organisation a property developer or broker choses to work with. The pandemic saw a number of lenders completely withdraw from the sector sharply or introduce prohibitive criteria, putting some developers in difficult situations.
Clients want understanding and consistency, through the good times and the bad, and Paragon was one of a small number of lenders that remained active throughout the pandemic. We saw a number of new clients come to us at that time because of that reason.
FR: If you could see one headline about development finance in 2022, what would it be?
‘Green finance options for SME property developers expands’.
Under the Government’s Future Homes Standard, new build homes will need to be built to higher energy standards than they are currently and that presents challenges for developers, particularly smaller operators. Sourcing the right materials, for example, can be difficult.
As lenders, we need to support clients as the improve the energy efficiency of their developments and also encourage some changes in behaviours. We launched our Green Homes initiative last year which rewards developers with a discounted exit fee if they build the highest-rated energy efficient homes.
It’s a start, but we understand more needs to be done individually and as an industry.
