Residential Property Development Loans 2020

This month the Nationwide House Price Index for June 2020 report house pricing ‘grinding to a halt’ which is not good news for us in the funding sector but there are still residential property development loans available.  The challenges of the current property market are well known, and the latest Nationwide report show that annual price growth ground to a halt in June with prices down 0.1% and annual growth negative for first time since 2012.

Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said: “UK house prices fell by 1.4% in the month of June, after taking account of seasonal effects, following a 1.7% fall in May. On a seasonally adjusted basis, house prices in June were 3.2% lower than in April.

“Annual house price growth slowed to -0.1%, from 1.8% in May.  This is the first time that annual house price growth has been in negative territory since December 2012.”

“It is unsurprising that annual house price growth has stalled, given the magnitude of the shock to the economy as a result of the pandemic.”

“The raft of policies adopted to support the economy, including to protect businesses and jobs, to support peoples’ incomes and keep borrowing costs down, should set the stage for a rebound once the shock passes, and help limit long-term damage to the economy.  These same measures should also help ensure the impact on the housing market will ultimately be less than would normally be associated with an economic shock of this magnitude.”

“It is unsurprising that annual house price growth has stalled, given the magnitude of the shock to the economy as a result of the pandemic.”

Finding Property Development Loans

Supporting those positive words, we are also seeing a wide range of lenders continuing to provide terms for residential property development loans. Nevertheless, the criteria for residential property development loans is tighter with many developers reducing their max LTV to 65%. Interesting, we are still seeing specialist mezzanine lenders maintaining their commitment to the market and this may be a key element for supporting developers in meeting such LTV requirements.
The June 2020 RICS UK Residential Survey report their members as seeing a recovery in the property market, with pent up buyer and seller demand rallying following lockdown. However, the RICS also repeat caution of their members in the longer term with expectation negative.

The RICS say “In terms of buyer demand, a headline net balance of +61% of survey participants saw a rise in enquiries over June. Furthermore, respondents across virtually all parts of the UK reported a pick-up in buyer enquiries during June. At the same time, new instructions being listed onto the sales market also rose firmly over the month, evidenced by a net balance of +42% of contributors noting an increase.”

Finding residential property development loans has never been an easy task but it is clear that caution in the longer predictions for the property market will not help. But residential property development loans are still available and include senior development loans, stretch, mezz and bridging.

Developer Money Market offer an online residential property development loans platform. If you are searching residential property development loans you can compare from over 250 development, stretch, mezz and bridge products from £25,000 to £100 million. Simply enter your key lending criteria and get instant results with application started by a simply click of the mouse.  To compare property development finance simply click here!

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