This is a financial promotion and is intended to provide information, not investment advice.
By Jason Ferrando, chief executive, easyMoney.com.
What’s happening right now in the UK housing market is exciting. The Labour government has made housing a top target of this current parliament and is aiming to deliver 1.5 million new homes over the next few years. This is an ambitious target, and whether they deliver remains to be seen, but this is creating activity throughout the industry and driving a greater need for development finance and bridging support.
The role of SMEs
In order for the government to achieve their target, they are going to need to rely on SME builders. It’s probably unrealistic to assume the major housebuilders can deliver all of this volume, and there will be schemes that are simply too small for them. This is where SMEs step in and across the UK there are properties just waiting to be developed.
Obviously, delivering 1.5 million houses will take more than just funding and there is a lot of red tape and planning congestion that needs to be tackled. However, should an SME developer secure their land and their planning consent, they need funding that will take their projects to the next step. And that is where bridge lenders such as easyMoney come in.
Smaller lenders for smaller builders
In my career, I’ve met with many large institutions when capital-raising and it’s struck me that they often don’t have the appetite to lend to smaller developments. This is not a case of money, but instead about resources and time.
In contrast, at easyMoney we are of a scale where we can dedicate more time and energy to each deal, which can often be the difference for an SME developer. We regularly visit each development we are financing and are there with developers every step of the way. Additionally, the rates developers get at a bridge lender are not that dissimilar to what they get from an institutional lender once they add in all the additional fees.
Bridging lenders can bring the personal touch that major banks can’t, often making for a more enjoyable process for SME borrowers. This can be crucial when things go wrong which undoubtedly will happen on a development of any size. Having access to a bridging lender, to have a personable conversation about reaching a solution to a problem, can be invaluable in times of crisis. This can also involve going above and beyond. Sometimes we’ll visit a development that’s nearly done, but it needs some final touches to get it over the line and improve its saleability. We can see the case for that and help provide extra support.
At easyMoney, we underwrite every loan on its own merit and our team bring years of experience to the space with former developers working in our senior management team. We know the struggles SMEs face but, with the exciting opportunities a state-backed 1.5 million housing delivery target promises, we are prepared to give them the time and support they need.
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