The Finance Market Post Pandemic
Michael Bristow is the CEO and Co-founder of CrowdProperty. In this article, he discusses how the specialist finance market has changed as a result of the pandemic, how market demand is changing and what funding products are needed.
There’s no doubt that the pandemic has had a major impact on the specialist finance lending market. Most funders in the market were exposed with single sources of capital, and they were the first to shut up shop as COVID-19 set in. Even those with multiple sources were exposed as those sources had exactly the same underpinning exposures to equity market volatility and lending attitudes.
CrowdProperty’s uniquely diverse sources of capital from retail, high net worth, ultra-high net worth, private fund and institutional sources have enabled us to be open for business throughout these tougher times. These diverse types of capital with different needs, preferences and attitudes, built up by seven years of lending with a perfect track record, give far greater reliability of funding through any stage of market cycles.
As a result, we’ve been able to support existing and new borrowers – picking up the pieces for many who have had agreed funding lines cut, even partway through projects. We have also seen other funding providers pulling out of refinancing completed projects. The projects have been successfully completed and value has been added. We have been working closely with current borrowers and other borrowers stuck on expensive late interest rates with other funders, assessing each on a case-by-case basis with an expert eye and working through the best solution for all concerned.
We’ve had a ‘Development Exit’ product for years to allow for final touches and sales timelines, which has understandably become a very popular helping hand in the current market – releasing the commitments of an expiring development finance loan and providing breathing space to achieve the most successful exit for the project.
We’ve seen rising interest in our ‘Airspace Development Finance’ product following the new PDR that came into force in August 2020 as developers pursue ambitious and creative opportunities by unlocking the potential development space above existing buildings in desirable locations. The launch of our dedicated ‘Modern Methods of Construction Finance’ product that, amongst other things, addresses the unique cashflow challenges of MMC construction approaches also reflects changes in the market.
Our ‘Bridging Finance and Auction Finance’ products guarantee delivery of the finance needed to help developers secure a property purchase within tight timescales and grow their property business quicker. Bridging Finance can also span stages through a property project, unlock capital from an asset or fund a moderate level of works.
We’ve made greater use of multiple bridges to cost-effectively lend across the project cycle; for example: taking a bridging loan to purchase in order to gain advantage in a competitive market and secure deals and/or add value by planning to leverage the equity position, then development finance, then development exit to cope with problems in the term lending market obtaining refinancing or sales. This customer-focused approach is much more cost-effective for the borrower and enables us to support the SME developers we work with throughout their projects.
Speed, ease and certainty of finance is key to developers spending less time sourcing funding and more time completing their projects to grow their businesses quicker and more profitably. At CrowdProperty, we leverage our proprietary technology for efficiency and deep property expertise for effectiveness of lending – and this is even more important in the complex world of property development. Our proposition is underpinned by technology-enabled systems, processes and algorithms, as well as using machine learning and big data analysis to process loan applications.
As the UK's leading specialist property project lending platform, we’ve now funded the development of 1,501 homes worth £300,000,000, originating £181,000,000 of agreed facilities and lending £141,000,000 to date. This has supported over £120,000,000 of spend on labour, materials and services in the UK economy.
The reliability of lending and knowledgeable support we have been able to offer SME property developers throughout the past 12 months is attracting more and more developers and more and abundant capital from private investors and major global institutions, including the recently announced £300m institutional funding line agreement with a new major investment manager. These institutions only look to work with the best platforms – giving deep pockets, validating institutional grade investments, and only backing the highest quality players after months of due diligence.
Whilst the diversity of our capital sources and deep expertise is partly responsible for our market leadership, our innovative and customer-centric FinTech / PropTech approach sets us clearly apart. As a true funding partner for your team, we help you grow your property business more quickly and more profitably – we’ve built the customer-focused lender that we wanted when we were undertaking property projects ourselves.
Find out more about funding your projects better and growing your property business faster and more profitably at www.crowdproperty.com/apply.