Over two thirds of brokers expect demand for development finance to increase in 2017
28 March 2017
A new poll of finance brokers working in the field of development finance has found that more than two thirds expect demand from housebuilders for development funding to increase in 2017.
The broker sentiment survey, carried out in January this year by specialist lender United Trust Bank, found that 69% of brokers believe that demand for development finance from housebuilders will increase in 2017 whilst a further 27% expect demand to stay roughly the same. Just 4% of respondents expected demand to fall.
The same survey also revealed that 63% of brokers working in the fields of asset finance, development finance, bridging finance and mortgages felt that the government was not doing enough to tackle the UK’s housing shortage and just 14% were confident that the government would overcome the housing shortage by 2020.
In addition, 74% of brokers described the outlook for their own businesses over the coming year as ‘bright’ with nearly a third (31%) predicting that the UK economy would grow beyond expectations in 2017.
Noel Meredith, Executive Director, United Trust Bank, commented:
“Based on our own start to the year, I’d have to agree with a majority of development finance brokers that there’s no shortage of demand for funding for new housing projects. There continues to be a strong desire from SME housebuilders to play a vital role in delivering the new homes the UK desperately needs and specialist lenders, like UTB, are keen to support them. We are confident that although there will be uncertainty over Brexit and the longer-term health of the UK economy, the fundamentals which underpin the property market persist. Demand for affordable starter and standard family homes is strong in most parts of the country and this is still translating into price growth in most regions. Although developers must keep a tight rein on rising costs for materials and labour, those presenting sound proposals to build the homes people want and can afford to buy will find lenders like UTB happy to provide the funding.
“I do however share many brokers’ concerns about the government’s ability to overcome the housing shortage by 2020. Although some of the recommendations in the recent Housing White Paper offer some hope of improvement to the dysfunctional planning process, any significant change will probably come too late to meet the ambitious ‘1 million new homes by 2020’ target the government set itself in 2015. Planning remains the biggest headache for most of the developers we deal with and unless the very first stage of the development process can be simplified and developers encouraged to build on suitable sites rather than discouraged, demand for new homes in the places people want to live will continue to outstrip supply.”
