Thankfully I’m not going to mention the Greek “crisis” or the Budget here (actually, I think I just did…) as every man and his dog has already provided us with an opinion which they feel we are entitled to. Instead I will stick close to the subject matter with a summary of developments (excuse the pun) over the last quarter.
The peer-to-peer market seems to be picking up pace with more platforms stepping in to the bridging and development space, with regular “debuts” and loans funded week by week. Still the jury appears to be well and truly out (judging by what we read in the press) as to how these will pan out and the next 12 to 24 months are probably crucial as loans will reach maturity and investors will expect their returns.
Away from the peer-to-peer space, development finance lender teams seem to be growing with new BDMs being recruited all over the country. This obviously reflects the growing levels of enquiries and prospects being presented to lenders, as business levels continue to grow and lenders now report that they are “busier than ever”. This is clearly great news, and naturally we hope this business growth doesn’t put pressure on resources to the extent that service levels suffer or “in principle” decisions are given in haste.
Permitted development rights cases have slowed, predominantly due to the requirement that they are mostly “completed and the use begun before the 31st May 2016”. Naturally that fast-approaching date has dampened the appetite of both developers and lenders, particularly for the bigger schemes.
We still continue to see new development finance options being brought to market, at all levels and for all quantums of project. Still the banks and institutions remain strict with their criteria and will generally only consider facilities of £1m upwards, but with some now offering higher loan to cost deals than previously which demonstrates their appetite to attract new business.
The “challenger” banks and indeed some of the term mortgage lenders seem to be sharpening their pencils when it comes to their light & heavy refurbishment products, with a range of products now being offered and at very attractive rates for the lower loan to value requirements. Such lenders can also offer competitive valuation and legal fees, no doubt given the volume discounts they can demand from their panels.
Interestingly one of the specialist bridging lenders has launched an auction finance product with no legal or valuation fees. I expect this will be well received given the impact some professional fees can have on a borrower’s decision-making process.
So what makes one lender the preferred choice over another, given there is now more likely to be options for a developer from a number of lenders offering the same cost of money and loan to value or loan to cost? The simple answer is, service, which is often underpinned by existing relationships, brought about and re-affirmed by experiences. Always check out testimonials to see if those who say they can, can.
Valuers, quantity surveyors and solicitors are clearly very busy currently, with their reports and processing often taking more time than a borrower anticipates. This is most evident with lenders who perhaps haven’t forged strong relationships with a network or panel of such professionals yet (particularly valuers and quantity surveyors) and therefore might not have the “weight” to demand swifter turnaround times. A good, pro-active surveyor and solicitor really can add “value”, particularly when a swift conclusion is required.
As volumes of business continue to increase, and introductions come in from an ever-growing range of industry professionals and intermediaries, this all piles more pressure on those in the chain and adds further demands to the already well-worked machine. But this is what we thrive on, and may those who continue to deliver, continue to prosper. I say “bring it on!”