Category

Blog

ashley-ilsen

Magnet Capital added to Dynamo’s panel

By Blog, Development Finance, Lending

Development Finance lender Magnet Capital have announced that they have been added onto the lender panel for Dynamo.

Their development finance offering will be available to Dynamo’s client-facing mortgage consultants and members of Dynamo for Intermediaries. This follows the lender’s recent announcement that they have added to their operations team to meet growing demand for their products.

Magnet Capital Chief Executive Ashley Ilsen said: “We’re delighted to begin our journey of working with the team at Dynamo which will undoubtedly give our products further market reach. In testing times developers need to work with lenders that can deliver and above all remain consistent in their offering. During the recent Covid-19 lockdown we backed all our schemes and carried on writing new business without reneging on a single deal. We’re here to be a long-term development finance partner.”

Ying Tan, founder and chief executive of Dynamo, added: “We’re excited to be joining forces with Magnet Capital whose personal and customer-oriented approach to lending so closely matches our own company values. I know that our consultants and club members will welcome their tailored development finance options and commitment to helping clients’ businesses grow.”

young-homeowner-moving-in

Government Reveals 95% Mortgages for “Generation Buy” Scheme

By Blog, Development Finance

During last week’s Conservative party conference, Prime Minister Boris Johnson unveiled his proposal for turning “generation rent into generation buy”. Johnson’s proposals involve making long-term, fixed-rate 95% mortgages more accessible for first-time buyers.

 

Johnson said during the conference that his party needed to “fix our broken housing market”, helping younger generations of people who struggle to afford deposits onto the property ladder.

 

Johnson continued: “We need now to take forward one of the key proposals of our manifesto of 2019: giving young, first-time buyers the chance to take out a long-term, fixed-rate mortgage of up to 95% of the value of the home – vastly reducing the size of the deposit.”

 

“We believe that this policy could create two million more owner-occupiers – the biggest expansion of home ownership since the 1980s. We will help turn generation rent into generation buy.”

 

Lending in 2020

 

Since the coronavirus outbreak and the global pandemic that has arisen from this, low-deposit loans have all but disappeared, many lenders withdrawing their offerings of 90% – 95% mortgages.

 

PM Johnson claims that out of prospective first-time buyers, two million could afford repayments on a mortgage, however face difficulties getting approved. In light of this, Johnson believes that by making low-deposit loans more accessible to such buyers could create, as previously mentioned, “the biggest expansion of home ownership since the 1980s’”.

 

So far, the government has yet to go into detail as to how plans for “Generation Buy” would work. However, it’s been speculated existing regulations may need changing in order for this to be feasible – including those established after 2008’s financial crash.

 

Such rules restrict the amount of high LTV mortgages lenders are able to offer. When applying for a mortgage, the maximum amount borrowers will typically be able to get is four and a half times their annual income. On top of this, Bank of England regulations further limit the attainability of this maximum amount – only allowing lenders to offer 15% of their loans at this amount or higher.

 

These rules, as well as other measures for affordability that surround lending criteria could, theoretically, be relaxed. However, the chance that mortgage lenders would be on-board for such a change up of regulations, particularly during a time of such economic uncertainty, is unlikely.

 

A possible way around this would be for the loans to be guaranteed by the government, holding responsibility over any and all borrowers that default on their home loan.

 

While many have started to predict the feasibility of Johnson’s plans, only time, and further announcements surrounding this plan, will tell just how the government intends to introduce “Generation Buy” to the UK.

sun-rising-on-construction-site

UK Construction Sees Sharp Rise in Activity During September

By Blog, Development Finance

While employment continues to fall, the PMI’s latest data suggests a sharp rise in activity for UK construction for the end of the third quarter.

 

The headline seasonally adjusted IHS Markit/CIPS UK Construction Total Activity Index registered 56.8 for last month (September) – this being up from August’s 54.6. The data from August signalled a setback for UK construction’s output recovery, as growth was shown to ease considerably from the high seen in July.

 

Throughout September the number of staff continued to fall, however the rate at which workforces were contracting slowed the most that has been seen in seven months. Of the explanations given for this significant fall in employment, some reported this to be down to the release of furloughed workers, and a restructuring of business operations.

 

According to data, the category that performed the strongest was housebuilding, with work done on commercial projects also having risen significantly.

 

As well as this increase in new work, construction firms also recorded an increase in purchasing activity as the third quarter came to an end.

 

This data has received some interesting responses from the industry, many reflecting on the positive results whilst thinking forward to the future of UK construction given the country, and indeed the world’s, current situation.

 

FMB chief executive Brian Berry said: “Growing activity in the construction industry should make this an attractive sector for young people considering their next steps after school, and people leaving other industries looking to retrain.”

 

“Construction has a key role to play in rebuilding the economy as recognised by the Prime Minister in his ‘build, build, build’ speech earlier this year. However, to ensure high standards, the industry needs to train, train, train.”

 

“This means the trades need to be prioritised in the Government’s funding allocations for colleges. It also means we need to strengthen colleges’ links with employers so that we join the dots.”

 

ilke Homes executive chairman Dave Sheridan commented: “It’s great to see housebuilding continue to bounce back strongly since lockdown earlier in the year, which is being buoyed by the release of huge pent-up demand in the housing market.”

 

“However, if the construction industry is going to continue on this positive trajectory it’s going to be crucial that we scale-up innovative methods to housebuilding because, at present, the sector does not have anywhere near the capacity to deliver on the government’s 300,000 home a year target.”

 

“Increasing housebuilding output must not come at the expense of the UK economy meeting its net-zero targets by 2050.

 

“That’s why as we look ahead to a more carbon-conscious climate, factory-built homes must sit at the heart of the solution.”

rachel-taylor

Magnet Capital continues expansion with second new hire this year

By Blog, Development Finance, Opinion

Magnet Capital has today announced the expansion of its Underwriting and Operations team with the appointment of Rachel Taylor as Operations Executive.

 

The development finance lender’s recent strong performance and ambitious future plans has led Magnet Capital to expand its team to meet the increasing workload.

 

Rachel brings considerable industry expertise and experience; joining from the Glass Property Group, a residential property developer specialising in London and the Home Counties; where she was responsible for managing the due diligence on potential development sites.

 

Magnet Capital has seen stellar growth since the property market reopened in May 2020, recording its best month since launching in 2018. The level of new business written has risen by 33% with enquiries also up significantly year-on-year. The development finance lender has attributed this growth to its consistent approach to lending through the pandemic.

 

Sam Howard, Managing Director at Magnet Capital, said: We are delighted to be able to hire someone of Rachel’s calibre. Coming from a property developer, Rachel brings invaluable insight into the developer’s perspective.

 

We understand how much value our borrower and broker partners place on Magnet Capital’s deep industry knowhow and the team’s ability to act as a finance partner. Rachel’s experience will bring an additional skill set and complement the existing operations team.”

sam-howard-magnet-capital

Magnet Capital marches through May with new business

By Blog, Development Finance, Opinion

Record level of new loans signed up in May 2020

 

Magnet Capital recorded its best month since its 2018 launch, with the highest level of new business written. Both enquiries and written business have risen with an 33% increase on the prior year.

 

Magnet Capital has benefited from its consistent approach to lending, which has not changed significantly through the pandemic, and continuing its approach of funding the right housing in the right locations.  It has completed on loans in March and April (including its largest loan to date, drawing down in April) and welcomed new business.

 

Sam Howard, Managing Director says “We have thrived in May by being open for business during this difficult period. Whereas other lenders immediately pulled down the shutters, our cautious lending model and years of experience enabled us to make sensible funding decisions, limiting potential exposure but continuing to lend.

 

We have a mantra in the office to be the tortoise not the hare and not to bite off more than we can chew. We understand how much value our borrower and broker partners place on consistency and reliability and this is what long term relationships are built on. In these tough times this is certainly bearing fruit.

 

We are delighted but not surprised with the recent numbers. Whilst the UK continues to suffer from the Covid 19 outbreak and arguably until we have vaccine, life will not return to the normal, there is a real sense that people want to get on with their lives. The fatigue of the Brexit years plus the seismic shock of the pandemic, has taken its toll but SME developers are seeing beyond this and thinking 15 to 18 months into the future. On that journey and beyond, we will continue to be their partner “

homes-in-neighbourhood

Government Announces £30m Funding Boost to Acquire Land for New Homes

By Blog, Development Finance

The UK government has recently announced that a funding boost of £30 million will be used to unlock surplus public sector land. This land will be used to build new homes whilst also supporting local economies during this turbulent period of the coronavirus pandemic.

 

This announcement was made at the annual conference for the Chartered Institute of Housing, Lord Agnew – cabinet office minister – stating that the government will be boosting its One Public Estate (OPE) programme as well as its Land Release Fund (LRF).

 

Those in the industry, have provided interesting responses to this new announcement,  including the likes of ilke Homes executive chairman David Sheridan, who has stated: “I welcome the government’s efforts to release surplus land for housing as part of a boost to its Land Release Fund and One Public Estate Programme.”

 

“However, to really kickstart a housing boom, government policy should be more ambitious. Ministers must be proactive in bringing land forward and designating parcels exclusively for factory- built homes.”

 

“This will help accelerate the pace of housing procurement and delivery in the UK – cutting construction programmes by almost half – which will be pivotal to any post-Covid-19 recovery plans.”

 

“Housing associations have a key role to play in using their own funds and their own land to boost the supply of affordable housing and should be encouraged to collaborate closely with Homes England and other stakeholders.”

 

One Public Estate – £10 million will be provided through this programme, helping to support early stages of development.

 

Through this programme, partnerships both new and already existing will have the opportunity to bid for support in delivering ambitious programmes – these programmes concerned around the deliverance of homes, jobs and improved public services.

 

The Land Release Fund – £20 million will be provided through the LRF, of which councils will have the opportunity to bid for to develop their surplus sites for housing.

 

The LRF targets specifically small sites, its support focused around SME builders.

 

Chairman of the Local Government Association, Councillor James Jamieson, has stated the following on the matter:

 

“Councils continue to lead their communities through the coronavirus crisis, working closely with other local partners including health and emergency services.”

 

“One Public Estate will play a crucial role as we move into the next phase and help with the local and national economic recovery.”

 

“This additional funding will support councils to make better use of their assets, including their spare land and property, to help join up local services.”

 

“This in turn will create new savings and efficiencies, as we look towards the future of local public services after the pandemic.”

eco-friendly-hand

Net-Zero Building Standards Don’t Have to Be Costly – Study Reveals

By Blog, Development Finance

A new report published by the UK Green Building Council (UKGBC) reveals that building to net-zero targets doesn’t have to be costly, and could likely enhance a project’s value.

 

The report by the UK Green Building Council, titled “Building the case for net-zero: A feasibility study into the design, delivery and cost of new net-zero carbon buildings”, explores implications of following net-zero standards throughout building development projects.

 

To help with this exploration, the report enlisted the help of designers, cost consultants and engineers, whose expert inputs have helped to create a clear look into applying net-zero targets to building projects.

 

The UKGBC Study

Throughout the study, two real-life building projects were examined, both at the design stages of their development, with one being a residential block, and the other being an office building.

 

Taking these two projects, the team then created two additional iterations to each of their designs, one aiming to meet the net-zero targets for 2025, and the other shaped by the targets for 2030. These two iterations were labelled the “intermediate” and “stretch” scenario respectively.

 

For the “intermediate” scenario of the residential block’s design, traditional gas boilers were replaced with air source heat pumps, in addition to other tactics to improve insulation and minimise heat loss.

 

In the same scenario, the office building design was altered by trading in the conventional structure of steel and concrete for a hybrid of steel and cross-laminated timber, as well as introducing active chilled beams and removing certain fitout finishes.

 

The Findings

 

For the “intermediate” scenario, aiming to meet the net-zero 2025 targets, analysis found that the cost only went up by 3.5% for the residential design, and 6.2% for the office building. It was also suggested that these costs were likely to be offset by the increased value and reduced costs for operating.

 

For the “stretch” scenario, analysis found that the cost for the residential building would be up by 5.3%, whilst the office building could range from between 8% and 17%.

 

Chief executive of the UKGBC Julie Hirigoyen commented: “We’ve known for some time that taking action to make buildings greener today will add value and save costs in the longer term. But the precise cost benefit analysis of achieving net-zero carbon standards on new buildings today has remained elusive.”

 

“This study provides long-awaited evidence that building today to the standards of energy and carbon efficiency required by 2025 doesn’t have to cost a fortune and is likely to be offset by enhanced value (e.g. higher rents, reduced running costs, higher sale price, reduced offsetting costs etc) in due course.”

construction-worker-with-plans

CHAS and NFB Help to Raise UK Construction Standards With Renewed Partnership

By Blog, Development Finance

The Contractors Health and Safety Assessment Scheme (CHAS) and the National Federation of Builders (NFB) have recently renewed their partnership, committing to the promotion of high operating standards throughout the industry.

 

The NFB represents builders and regional contractors throughout both England and Wales. It is one of the country’s longest standing trade bodies, created to not only represent professions in building, but furthermore to improve the conditions NFB members need to contribute to a successful UK economy.

 

CHAS managing director Ian McKinnon has made the following comments on the partnership:

 

“We are delighted to be renewing this important partnership which will help construction firms of all sizes demonstrate compliance and build their businesses.”

 

“Both CHAS and the NFB have gone from strength to strength since we first joined forces in 2018 so it is exciting to be able to bring an even greater range of benefits to our respective memberships.”

 

What Does the Renewed Partnership Include?

 

Through the NFB’s membership with CHAS, they will be eligible for assessment to the new Common Assessment Standard.

 

The Common Assessment Standard has been built with the aim of standardising the prequalification process, enabling both contractors and their clients to improve the efficiency of supply chains and find business opportunities that are reliable.

 

This standard helps companies to attain compliance and accreditation easier than before. These standards streamline the supply chain of construction, and is known as the “gold standard” throughout the industry.

 

CHAS will also enable NFB members to demonstrate their commitment of operating with high ethical, safe and sustainable standards. This opportunity will be provided to the NFB by CHAS through third party accreditation packages.

 

As part of the partnership agreement, CHAS will also offer all valid members of the NFB a discount of 20%. Contractors part of the NFB will be visible to CHAS’s 1,500+ clients via their client portal upon order purchase/accreditation.

 

In return for this, the NFB will offer CHAS contractors a discount of up to 10% when joining. This discount will also be offered for renewals following their joining, providing contractors with a range of benefits such as business services and training support.

 

The NFB’s chief executive Richard Beresford has been reported to comment: “We are very happy to be renewing this agreement with CHAS which will help our members’ businesses prosper while opening up a range of benefits to CHAS members.”

ashley-ilsen

2020 So far…. The development finance market

By Blog, Development Finance, Opinion

I think it’s fair to say at the turn of the year no one expected that we’d be stuck in our homes for several months and the immediate future of our economy would be looking far from rosy. In fact, going into January and early February, Brexit was still the buzz word on everyone’s lips in the industry. I think the way we responded as an industry was admirable. Had something of this nature happened say seven or eight years ago I don’t think we would have been as well placed to take it on the chin. I believe we’ve matured as an industry in recent years and as a result we are more robust in our lending practices and our ways doing things.

 

As I’ve often complained about before, for me one of the key things the development finance sector needs to deliver is constancy. Without consistency we don’t have housebuilding and new homes being created. Initially it was disappointing to see that some self-styled development finance lenders were unable to decide whether they’re in or out. This is not bridging and the risks are much higher. I strongly believe that if you can’t be in the market offering development finance during the bad times then don’t operate in the market when it’s performing well.

 

The biggest losers from this level of unpredictability is the consumer and, after all, the main goal of the development finance sector is to assist SME builders and developers create new homes. Similarly, I found there to be a high level of frustration amongst brokers unable to place deals with lenders who had suddenly dropped out the market. The deal flow was still there, but some of the lenders were not. However, the majority of us stood firm, with tweaks made to LTVs and some lending criteria understandably tightened. It was great to be able to report that Magnet Capital had one of our strongest months for new business in May, and we weren’t the only ones setting PBs during the lockdown period.

 

One of the criticisms I’ve had of the development finance space over recent years is that we’ve lacked innovation. The most successful lenders over the coming years will be the ones that can innovate and provide new and exciting ways of doing things. Development finance lenders have been on a slow curve to absorb and start using new technologies, so it was interesting to watch the Covid-19 crisis accelerate this movement. Lenders suddenly had to be equipped to have their whole force work from home.

 

At Magnet Capital it was no different for us. We make a strong point of meeting every single person we lend to face to face and for the first time in my career this was no longer possible to do with every borrower. Whilst Zoom was an excellent tool for staying in touch with each other, I don’t believe that there is a replacement for face to face meetings and contact. I’m delighted to report that our site visits and face to face meetings have started again where appropriate.

 

Looking forward I think development finance lenders need to avoid the mistakes of the past. There is no point of coming to market at LTVs you can’t sustain. We are almost undoubtedly staring down the barrel of an unprecedented drop in property prices. Development finance lenders with genuine expertise would have already factored this into their offering long before we reached this crisis. However, I will add that it’s not LTVs that cause the biggest threat to development finance lenders, but internal practices and attitudes to lending. I have seen via some of our introducer partners examples of the corner cutting that still exists in the development finance industry. These are the lenders that are going to be tested the most.

 

Brexit is also still a looming cause of uncertainty in the medium-term outlook. I’ve already seen many cases of building suppliers from the continent looking to raise prices for our builders over the coming year and this could seriously hamper many new build and heavy construction projects. Again, a development finance lender that understands the market will have already factored this into their offering.

 

Unfortunately I don’t have all the answer, but going forward we need to continue sensible lending practices at sustainable LTVS. We will need to continue to adapt. This is how we’re going to provide consistency to our brokers and consumers, and this is how we’re going to continue to thrive as an industry.

 

Development finance grade 7/10

London-city

The UK’s Second Most Expensive Home Now Up for Sale in London

By Blog, Development Finance

Headlines exclaim “Billionaire Wanted” as the second most expensive property in the UK hits the market. Priced at £185 million, this mansion sits on 1-18 York Terrace East, London, and was designed by the famous Buckingham Palace architect John Nash. Nash is renowned for his design of the capital’s royal palace as well as Brighton’s Royal Pavilion and Regent Street.

 

The firm currently pushing to sell the huge property have claimed that someone with “billions” who currently wants to find a property in the UK should inquire.

 

The mansion was built between the period of 1821 to 1826, its current owner Zenprop UK, a property investment firm, speculated to have originally purchased the property four years ago for £200 million. However, despite these claims, the chief executive of the firm has commented that the property was purchased for below the price it is currently listed at.

 

The Daily Mail reported comments made by Zenprop UK’s Derrick Beare claiming that the sale “is not for me to make a return, it’s pretty much to get my money back and move on.”

 

“The current price is a result of Brexit and the pandemic. It should be more, but I don’t think I can get more in this market. It won’t appeal to many people but we only need one person. The kind of person with billions, who wants a place in London.”

 

About The Property on 1-18 York Terrace East, London

 

This newly updated property was originally intended as 18 separate homes, however, after WWII was converted into government offices. During the war, the building was almost demolished after suffering bomb damage, however after public outcry was saved, and most of it afterwards used by the Ministry of Works.

 

In 1967, the terrace was when transformed by the International Students Trust into luxury student accommodation. The property was then used as a home for students studying around the area until it was sold in 2016 to Zenpop UK.

 

Zenprop UK are associated with the South African premier property development and investment company Zenprop Property Holdings. The firm agreed to a long leasehold extension, and have been restoring the building to residential use for over three years.

 

Beare is reported to have insisted there is interest for the property – of course, from incredibly wealthy prospective buyers – one even considering placing a bid of over £200 million. However, due to Brexit this buyer had pulled out.

 

The mansion now stands complete, Grade 1 Listed and 117,000sq ft, thought to be the first time in history that an entire Nash terrace has entered the open market.