Over a third of brokers predict developers will find it harder to secure funding, according to a new survey by United Trust Bank.
Out of the brokers surveyed, 38% believe that over the next year it will become harder for builders and developers to secure funding to commence new development projects; 59% said that the availability of development finance will remain broadly the same; while only 3% believe that it will become easier for developers to access development finance.
“There’s clearly a perception amongst a large number of property finance brokers that any jitters about the UK property market will lead to the availability of funding for SME developers drying up,” said Noel Meredith, Executive Director of United Trust Bank, commented. “Indeed, there have been indications that some lenders, or the funders behind them, have reconsidered their appetite for development finance following the Brexit referendum.
“However, several specialist banks, UTB included, have funds available and are very keen to lend them.”
According to Meredith, development funding has far from disappeared, but the lending landscape has changed. “In the last few years, established and newcomer specialist lenders have demonstrated that they are credible and in many ways superior alternatives to the larger banks which once dominated the market,” he said.
“If an experienced developer presents us with a well-planned and properly researched proposal which includes good evidence of strong demand for the planned homes at the target sales prices and they can demonstrate previous success of developing for that sector, we will be very happy to consider lending them substantial sums of money,” he added.