Fair Rents (Scotland) Bill or Artificial state manipulation of free market rent?10:34 AM, 6th November 2020
About 4 weeks ago 36
It is estimated that around 300,000 new homes need to be built every year to satisfy the pent up demand that has been growing in the market for over a decade. Our population has and is increasing and the gap between supply and demand is ever widening.
With Article 50 about to be triggered and key European elections looming, the high street banks are tending to cherry pick the best deals and making the application process very burdensome and protracted. This of course doesn’t help the smaller developers.
One Door closes two and more open:
The reluctance of the traditional banks to lend, has left many property developers frustrated as they struggle to obtain their funding requirements. This has created opportunities for new lenders to enter the market. These new funders are enabling property investors and developers to finance their projects by providing much needed liquidity.
Whilst the interest rates were set slightly higher than the old high street loans, the application processes are far simpler and more streamlined, leading to quicker decisions and completions.Thus helping to secure deals and project opportunities when they arise.
However, with the increased competition, the rates have been reducing and the types of facilities expanding. All of these lenders have different lending policies and they range from lending 100% of the purchase and development costs (for the right schemes), lending on a loan to cost basis, and loans based on the final Gross Development Value (GDV).
With the large number of lenders and their varying criteria, developers are increasingly using the services of commercial finance brokers to assist with the applications. This allows them to focus on developing, whilst the brokers source the best finance for their needs. Most of these lenders have departments that are dedicated to dealing with intermediaries. They tend to prefer working with brokers who understand their policies, rather than initially dealing directly with the customer, who is likely to get pushed from pillar to post and department to department, whilst they try to understand the customers’ requirements.
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