Extracts from Housebuilder magazine 'Lending a Hand' - March 2010
Few involved in the funding game expect a wholesale return to the residential market from the big institutions in the short-term. Chris Dowdeswell, principal of CD Property Finance, another brokerage specialising in residential funding, says: “2010 is unlikely to see the high street banks returning to property development lending in any significant way. This is because the banks have extremely high property lending exposures and development finance is regarded as very high risk.”
“The lenders currently prefer family housing schemes, in traditionally popular areas, as opposed to apartments. Over the past 12 months, [we’ve] arranged funding for over a dozen such schemes with a variety of lenders,” says Dowdeswell.
With apartment projects, the lending criteria is, however, far more stringent to reduce risk. Chris Dowdeswell explains: “It’s possible to finance apartment schemes of up to about ten units but whereas bank finance of up to 60% of gross development value is available for houses, only 50% of GDV is available for apartments.”
What most developers want to know, apart from whether the housing market will recover is also whether the funding market will get easier going forward and Chris Dowdeswell is reasonably positive: “I would expect to see one or two more lenders gradually dip their toes back in the water towards the end of 2010 provided property sales and values hold steady during the year.” For most in the industry, that is a reasonable ambition.
For more information please contact Chris on chris@cdpropertyfinance.com
http://www.cdpropertyfinance.com/
