Developer trends coming out of lockdown
With construction sites open again and actions taken to restart England's housing market, many developers are pushing ahead in an effort to make up lost ground.
The sector has taken a massive hit due to COVID-19. Looking ahead, to a hopefully more positive future, here are our developer trends as we begin coming out of lockdown and beyond.
Many are predicting that work and home life, following the global COVID-19 pandemic, will change forever. With that in mind, developers are now taking a different approach to attract new buyers by creating living spaces, blended with homeworking amenities.
According to research carried out by Lloyds Bank, two in five workers say that when looking for a new home, suitable workspace is a factor.
Factors that some developers are already taking into consideration are:
Dedicated space in each unit earmarked for an office e.g. desk and filing cabinet.
Enhanced connectivity throughout units and communal spaces, including signal boosters and enhanced cabling.
Communal work lounges, in place of previously sought after amenities such as resident gyms and bars.
Enhanced delivery features, such as the ability to take secure and contact-free deliveries.
Open plan living is still highly desirable, but we predict there will be a shift to incorporate more private, sectioned-off areas in new homes.
With the disruption, as a result of the COVID-19 pandemic, some lenders may look to take a more aggressive stance when it comes to issuing new facilities and trying to regain existing capital.
Development exit loans
With the above in mind, we believe there will be a rise in development exit loans as developers look to repay their current development loan before the sale of the development has been completed.
The main reasons for doing this are:
To reduce costs and increase the project’s profit - exit finance is often charged at a lower rate than development finance.
To help bridge the gap if your current development finance facility is coming to an end and is going to reach the end of its term before your sale(s) is completed (especially with the delays that have recently occurred).
Whatever the headlines may say, we have looked to find examples of real-life development finance activity that has gone on over the past few weeks.
Sancus provides £2.1m to refinance a development site in Birmingham. The facility will be used to finance the site, allowing the developers the time to terminate current tenancies and prepare the site for development. Planning permission has already been granted.
Paragon Bank providing £18m in funding to support a developer in being able to complete the remainder of the project earlier than expected. Previously, construction on the site had been carried out on phases with smaller units, but with the extra funding, the developer can finish the remaining 81 units.