Bank lending to developers halves in two years
Bank lending to property developers is half what it was two years ago, down from £34bn in January 2014 to £16bn in January 2016, research claims.
Funding Options, which calls itself an online business finance supermarket, said this funding shortfall is preventing property developers from starting new projects and could be contributing to the housing crisis.
Conrad Ford, chief executive of Funding Options, said: “Property developers need finance to start projects and most traditional banks are unable or unwilling to provide it.
“The UK desperately needs more new homes as many younger potential homebuyers are being effectively priced out of the housing market.
“Better access to finance alone will not solve the housing crisis but it is a vital component of the solution.
“There is a longstanding government of target of 200,000 new homes being built each year from 2016 – on current trends there is no chance of this happening.”
Ford suggested that developers are having a particular problem in securing the bridging finance or auction finance needed to start a project.
He added: “Specialist bridging loan and auction loan providers have different criteria for lending and streamlined decision making processes so are able to step in to fill part of the gap.
“Developers that come to us say that banks are still happy to provide term loans and mortgages but without bridging finance projects will never get off the ground.
“This collapse in bank lending to developers cannot be helping the housing crisis, the more difficult it is for developers to secure finance the fewer properties will be built.”