Developers and house builders
The recent Budget announcement by the chancellor hints at an imminent transformation in the landscape for developers and house builders in the coming year. Following the Budget, an investigation into land banking has been initiated, potentially compelling builders to swiftly commence development on the land they own or divest it.
Typically held by major house builders and sometimes by entities like supermarkets, this land focus appears to centre around areas that have received planning permission but remain undeveloped. The investigation’s outcomes, scheduled for disclosure during the Spring Statement, might prompt immediate actions against those stockpiling land.
For smaller developers, this development could prove advantageous, potentially leading to the sale of land parcels with planning permission shortly before or after the statement. Additionally, there is speculation that the government may introduce maximum timescales for builders to initiate development on land post-planning permission, further shaping the dynamics of the real estate sector.
Developers and House Builders | Financing development
Securing funding for development projects is crucial, particularly for smaller developers seeking a competitive edge. Swift access to development finance can be a game-changer, giving smaller developers the advantage of immediacy and a commitment to completing projects without the distraction of juggling multiple ventures simultaneously.
In the landscape of 2017, there witnessed a notable surge in the availability of development finance from a diverse range of lenders. Some entities were specifically established to cater exclusively to development financing, while others, including bridging lenders and various financial institutions, recognised the potential to diversify into the development sector.
Interest rates naturally fluctuate, but in specialised lending, their significance often diminishes compared to other critical factors. The speed of the financing process, the loan amount, the proportion of the build cost covered, and the flexibility offered can outweigh the importance of interest rates.
Depending on a developer’s requirements and experience level, seasoned lenders may extend additional support or guidance beyond mere financial assistance. This multifaceted approach ensures that developers secure the necessary funds and benefit from a strategic partnership that enhances their overall project execution.
Developers and House Builders | Growing market
For brokers venturing into this sector, the landscape may prove to be a significant departure from their usual practices. The disbursement of funds often occurs in stages, with development lenders relying on the Gross Development Value (GDV) and construction costs to ensure project feasibility and successful loan repayment.
The criteria for development loans can vary, encompassing factors such as the developer’s experience. Lenders may specialise in residential, commercial, or semi-commercial developments like the mainstream market. The dynamism of this market is undeniable, presenting burgeoning opportunities for those willing to explore its intricacies.
If you are new to this domain but eager to dive in, various networks and master brokers stand ready to assist. They can provide guidance, share valuable insights, aid in packaging and placing cases, or even manage the entire process through referral collaborations.
As you navigate this evolving landscape, tapping into these resources can prove instrumental in unlocking the full potential of this growing market.
The recent Budget announcement by the chancellor hints at an imminent transformation in the landscape for developers and house builders in the coming year.
We’ve come to the end our our discussion on “Developers and House Builders”