Development finance Archives - Page 4 of 5

The Impact Of Brexit On The Housing Market

by Ivy Huang | Jan 28, 2021 | Latest News

While it looked like a deal may not happen, the UK finally left the EU after a last-minute Christmas Eve trade deal. Now we are on the other side; it is time to consider what will happen to the housing market.

During the transition period, the predicted crash in property prices never really materialised, although there has been a readjustment to counter confidence in the South East and London. The housing market’s performance so far has been good news for homeowners worried about venturing into negative equity. For now, demand continues to exceed supply, and while this continues, house prices will rise.

The Impact On Development Finance

The property market has always been seen as a safe haven and leading form of property development finance, particularly in times of economic uncertainty, such as that created by the referendum or a snap General Election. The UK housing market consistently offers stability and security for medium and long-term investments. It is recognised as more reliable than investing in bonds, shares, and stocks, which is all good news for property investors and developers.

Brexit may have created a weakness in the Pound, but this encourages foreign investment in residential and commercial property. As such, house prices have continued to rise steadily since pre-referendum times. Statistics from the UK House Price Index show that as of November 2020, house prices have risen by 7.6% compared to the previous year.

It is fair to say that the COVID-19 epidemic has so far impacted the housing market more significantly than Brexit. The first national lockdown saw housing transactions drop to 40,000 in April 2020. As restrictions were eased, transactions rose to 100,000 in October 2020.

Since the summer of 2020, various factors have fuelled activity in the housing market. Low mortgage rates and bridging loan rates have facilitated activity from private owners, property investors, and developers.

Looking To The Future

Looking into the future, there is nothing to suggest that the Brexit housing market will see the growth in property prices stall. Another national lockdown continues to drive sales as people search for better lockdown experiences. The current stamp duty holiday, introduced to support buyers during the epidemic, has reduced the tax buyers must pay and will continue to have a positive effect until the holiday ends on March 31st, 2021. The housing market will likely see fewer transactions in April and May 2021, when normal stamp duty levies return.

During 2020, one in five households in the UK were part of the private rented sector. This number is expected to rise to one in four by the end of 2021. This reflects the desire of more middle-aged and retirees opting for lifestyle flexibility, which is good news for landlords and developers converting properties into HMOs (House in Multiple Occupation).

All indications so far are that the UK’s housing market is safe, property prices will rise, and the number of renters will increase.

How Coronavirus has affected the Property Market: Thoughts from the Industry

by Ivy Huang | Jun 26, 2020 | Latest News, COVID-19

The past few months have been a time of unprecedented change, with Covid-19 affecting us all personally, impacting every industry and indeed creating change around the globe. As we have started to settle into our new normal, I took the opportunity to meet up (virtually, of course) with a Monitoring Surveyor, Valuer, Lender and Solicitor to find out more about the effects Coronavirus has had on their businesses, work and the industry as a whole.

The Monitoring Surveyor

The Monitoring Surveyor of our discussion group noted that social distancing on sites had been adhered to, with minimal on-site staff showing them in and out. Access to materials such as plaster have been problematic, but with suppliers re-starting production they are confident that this will be remedied soon. Of their 30 live sites, only 2 saw a shut-down due to Coronavirus but all are now open, with one site having 22 parties lining up to view the units prior to completion.

The Valuer

The Valuer in our discussion group has sent staff to sites, fully adhering to PPE requirements, but have found some tenants denying access. They have been able to continue to value properties, however and continue to be busy – with their industrial team being particularly in demand at present. The Valuer noted that PD schemes have mainly been retained as investments, with no current evidence of a major yield shift on larger developments. They have noted a significant uptick in quotes in the last two weeks, with cities outside London in particular picking up in activity. Sheds and beds are the key focus.

The Lender

The Lender has seen somewhat less disruption in recent months, with only 1 out of 41 sites experiencing a Covid-19 related shut down and that site is now back up and running. Recent weeks have also seen an explosion of new enquiries coming in, reminiscent of the figures they last saw in February.

The Solicitor

The Solicitor of the group mentioned that while refinances have been progressing as normal, site acquisitions saw the majority stalling albeit still moving along gradually. However, with 4 completions in the last two weeks, activity is picking up now with their residential property team very busy.

Moving Forwards

As we move into the next phase of lockdown, a ‘new normal’ will start to emerge. With a few months of working effectively from home under their belts, the Valuer in the group believed that their numerous offices and desks could be downsized in the future with less time in the office. The Solicitors and Monitoring Surveyor agreed with that thought to a lesser extent, believing that there would continue to be a need to have a communal working location. Wherever the location, on the whole, the group agreed that green shoots are starting to be seen within the industry and are cautiously optimistic that things are starting to move once more in the right direction.

By Fintan O’Riordan, BLG’s Business Development Director.

Let’s embrace a better way of building new homes

by Ivy Huang | Jan 14, 2020 | Latest News

Looking beyond Brexit, the UK elections and recent international events, it is sobering to think about what the fires happening in Australia and the cost that its environment, wildlife and people are paying. The fortitude of the Australian people is remarkable when you consider that many have seen their houses and communities disappear.

The impact of housing on the environment

As a lender to the residential construction market, this has made us think about the impact housebuilding has on the environment. The Committee on Climate Change estimated that 18% of the UK carbon emissions came from buildings (mostly homes), with a further 15% from electricity consumed by buildings. The UK has a key target of reducing carbon emissions by 80% by 2050 so the Building industry has a role to play in helping meet this target.

Why aren’t more energy-efficient homes being built?

We are seeing some trends emerge: pre-fabrication, modular construction, new materials and some energy-efficient technology, and we are indeed currently funding a modular construction site up in Scotland, but these still are piecemeal. Why?

Cost remains an issue with some of the new technologies and technology itself is evolving rapidly making it difficult to see where standardisation can be achieved to achieve economies of scale. Local councils are very focused on reducing car usage in metropolitan environments but why would they not insist on electric car charging points as part of their planning approvals for example? They also seem to have quietly abandoned sustainability code levels in recent years.

Modular and off-site building methods are problematic for funders simply because the standard control mechanisms used by surveyors and lenders don’t apply in the same way. We mentioned that we are funding a scheme in Scotland – we have been able to get comfortable with a scheme built entirely off-site because the developer controls the process from end-to-end, i.e. they are manufacturing and storing the product in-house.

Our experience with new technologies (as a lender) has been poor to-date, not because the technology doesn’t work, but more because the specialised skills required to implement these techniques are lagging in the UK. The industry seems generally very reluctant to push progress and training in new directions but runs the risk of being leap-frogged by the more visionary ones, as buyers of new homes in both the private and public sectors start demanding higher levels of sustainability.

The cost of using energy-saving technology is coming down rapidly and it would be good to see more use being made of renewable energy systems. Estimates that the cost of achieving carbon-neutral new housing would add 1.5% to 2.5% to the end price tag but this is likely to come down and ought to be cheaper than having to retro-fit technology to houses being built now.

It’s up to all of us accelerate change

So, we could all do our bit to accelerate change as a funder – to be more open-minded about schemes involving new methods, as a consumer – about asking for better, and as a player in the industry – by challenging our borrowers and advisors to aim higher!

By Cécile Verroest, BLG’s Credit/Risk Director and advocate of sustainable living.

Protecting the Terroir – whilst Delivering Rural Homes

by Ivy Huang | Mar 14, 2017 | Latest News

Visiting rural development sites

Armed with my BLG hard hat, last week I visited several rural development sites in Yorkshire. It was good to spend time talking with the developers and construction specialists who are the lifeblood of the home building industry.

It was also good to get out into the countryside, whilst I have made my home in London and spent the bulk of my business career in the City’s finance industry, I was brought up in the countryside. My Grandfather was a fruit farmer – mostly apples – they say ‘you can take the boy out of the country but can’t take the country out of the boy!’

As we all know, like most parts of the British Isles, the countryside is in the grip of a housing crisis. Perhaps the countryside poses different challenges than the housing issues suffered in our towns and cities, but it is no less devastating for those who cannot find or afford a home. Rural wages tend to lag behind urban salaries and often affordability is a problem.

We need to rebuild our country communities – and this means housing

One could say that rural development has a considerable benefit over urban, in that there is less pressure on the availability of rural land. OK, there would be a “hue and cry” if we started to build over the village green, nobody wants that. But villages and rural communities need to grow and develop, both physically and socially. If planning policy is used to hold back rural development in villages and smaller towns, they will simply become museum pieces and slowly die. Many villages have already lost the local shop, Post Office and pub. Action needs to be taken now to rebuild our countryside communities.

Whilst it is in the cities that there are the most acute housing issues, and delivering new affordable homes there must be the focus of central government, our local government needs to be proactive. There are around 4,500 villages in the country, many have an ageing population and need young blood for a vibrant community to thrive. But young families need affordable housing fit for purpose, both in the private rented sector and the owner-occupier market.

New housing schemes need to be well designed and sympathetic to the local style and community needs. Therefore, this is my plea to the Parish Councils and other local community bodies to be positive about new development; without it, there could be nowhere for the teachers, the carers, the shop-owners or even our grandchildren to live.

Stuart Parfitt is Managing Director of BLG Development Finance and a keen cricketer.

Proud to have funded the development of 1000s of new properties

by Ivy Huang | Feb 8, 2017 | Latest News, Press Release

We are proud to have funded the development of 1000s of new properties across England, Scotland and Wales. The table above shows just some of the projects BLG has supported recently.

Interested in funding? Talk with BLG
We offer fast and flexible property development finance for professional developers; our expert team welcomes the opportunity to discuss your next development.

To be put in touch with your local BLG Regional Director, please call 0845 465 6500 or [email protected].

Thank you.