Development Finance Update

This year covid has certainly created its fair share of challenges for the property development finance market so I felt it would be useful to talk about some of the positivity in our sectors that we cover.
Bridging Finance

As many of our clients have seen CBILS in the short term has replaced a large proportion of our traditional bridging loans (development exit facilities) and it’s our belief that if you fit the lenders criteria then we want to get our clients approved to take advantage of this limited offer closing in November. Outside of CBILs we have seen the bridging lenders return to 75% loan to value for residential bridging together with semi-commercial at 70% and commercial 65%. Further supporting this we are now seeing demand from lenders for land finance up to 60% loan to value. In summary the bridging market is moving closer to its pre covid positions and we expect this to continue over the last quarter of this year.
Development Finance

The senior and stretch senior debt markets have been well supported through covid, this has largely come from a few specialist banks in the space. Some of them have offered CBILs facilities which have been welcomed by our developers putting in place competitive solutions. Outside of the banks we have seen the privately funded institutions offering our clients access to good levels of gearing with facilities up to 65% loan to gross development value for most schemes and 70% as an exception for the right scheme. Mezzanine finance has been limited however there are finance houses open who can stretch to 75% loan to gross development value. Finally, we have seen the high street re-open for new business on development schemes in particular sub £1,000,000 facilities where they remain competitive at their pre covid levels.
Joint Venture (JV)

Our panel is built around institutional full-time partners. For the right scheme there is a demand which has been further supported by a positive sales market residentially across the UK in particular regional developers. We have added a smaller provider with an appetite for schemes ideally at £2,000,000 to £3,000,000 gross development value. Generally, we feel there is a stronger demand for housed developments schemes.
For further information please either email tom@napexfinance.co.uk or call me on 07885 981 762.

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