The government is urging housebuilders to build more homes, and this is increasing demand for development finance. The government has a target
to build 245,000 extra homes, but some large housebuilders hold land that they have no current plans to build on.Many plots of land have planning permission but no start date for construction. The government is pressurising housebuilders into utilising empty land as soon as possible.
Sometimes a large housebuilder holds onto land to make a profit as land prices rise. Small to medium developers are actively looking for land for housing developments. It has been suggested that the large housebuilders should sell some of their land to smaller developers.
Lenders have reported an increased number of loan applications from small to medium developers. Development finance and commercial mortgage interest rates are competitive, and brokers can arrange good deals with specialist lenders.
New lenders have recently started and are competing both on cost and customer service. It is difficult for new lenders as, without a track record, brokers cannot judge their performance and may not recommend them to their clients.
Some developers are using bridging loans to purchase land and fund construction work.
Not all new homes are built for sale, there are many build to rent projects for the private residential property market.
If, as is predicted, house building continues to increase, brokers and lenders will be busy providing the development finance that builders require.
