First Graduate of Rotation Scheme, Theo Athienitis

First Graduate of Rotation Scheme, Theo Athienitis

Being BLG’s first graduate to be placed within a rotation scheme, I have been incredibly lucky to witness first-hand how proactive and engaging all my co-workers are. They are always happy to help me whenever I need it, both within department and out of department – readily answering questions when I required clarity on the functions of our development finance process. It has been an amazing experience to see how willingly everyone works together to help each other out.

Having completed my first rotation with BLG’s in-house valuations team, I have learnt, the ins and outs of market appraisal. Visiting dozens of sites and speaking with some of our developers, I came to better understand what adds value to a potential development and what could negatively impact its GDV.

I have met some of our wonderful developers and I believe that BLG’s nuanced approach to borrower selection – accounting for both the financial fundamentals and the right personalities – is what sets us apart from other lenders. I’m excited to continue learning and contributing to our team’s success in the months ahead.

 

I learnt a lot from Zahra, as I grappled with the difficulty of finding the balance between comparable property sales and agent pricing opinions. Teaching me to prioritize finding the right comparable rather than overcompensating with every comparable. I feel I was able to foster some brilliant relationships with agents over the period and would like to thank them for giving their time so generously. Throughout this period I was able to gain hands on experience, undertaking many valuations independently (subject to MRICS approval). Throughout this early stage due diligence process, Zahra’s guidance was extremely helpful in keeping me on track while also providing confidence building encouragement. Over this 4-month period I underwrote values for roughly £30 million of GDVs.

Whilst monitoring some of our loans I got to put faces to names and start building relationships with some emerging, forward thinking developers who’re producing quality projects. One such visit was in eastern Essex, where after attending a late-stage development of three luxury properties I was able to go and get fish and chips by the seaside on my lunch break.

Alongside my day-to-day role valuing prospective developments I was tasked with a research project, looking at the market share of SME developers. I read research produced by the HBF and the NHBC, and studies from the major advisory firms – specifically, I found Savills’ research very insightful. Thanks to BLG I was able to attend the HBF Policy conference, hearing the opinions and findings of some of the leading names in the industry.

Through all this research, guided by senior management, my findings have been that this section of the market is still in decline (market share of SMEs circa 10%), with the biggest obstacles to small developers being: inefficiencies in planning, labour and supply chains, funding characteristics, lack of available/viable development  land and Majors ‘dipping down’.

I have now moved into my next rotation, sitting in the first of BLG’s two Credit Operations departments. In this role I will be tasked with taking deals from credit approval to completion. The processes required have been mind boggling. But, I have been wonderfully, rotating through the business, guided by my new team Lexie and Laura. I am grateful and excited for this opportunity and feel lucky to be learning new things every day for the next 4 months.

This experience, rotating through the business, has already taught me a great deal about the finance and property development industries, and I am looking forward to continuing to learn new things and grow in this role. A great way to cap off my first full week with the Credit Operations team was an evening visit for dinner and drinks with one of our valued legal representatives – Fieldfisher. I must say the view was almost as good as the company in attendance!

Theo Athienitis, Graduate Analyst, BLG Development Finance

Navigating Development Finance

Navigating Development Finance

​Shakespeare’s timeless advice, “Neither a borrower nor a lender be, for loan oft loses both itself and friend,” highlights the importance of caution in financial dealings. While complete avoidance might not be practical in the business world, it underscores the need for careful consideration, especially for property developers seeking funding. In this context, understanding how to effectively present your case to a lender becomes crucial.

The Lender’s Perspective

Lenders share a common goal with property developers—ensuring the success of a deal. A successful deal not only secures returns for the lender but also paves the way for potential future funding opportunities. It’s essential for property developers to recognise that experienced lenders bring a wealth of knowledge from funding various development scenarios, making it prudent for borrowers to respect their expertise.

Putting Yourself in the Lender’s Shoes

To present your case effectively, it’s imperative to empathise with the lender’s perspective. Imagine you are lending your own money; thorough scrutiny of the proposal would be non-negotiable. Lenders seek comprehensive evidence, including written documentation, visuals, and recommendations. Equally important is establishing trust with the borrower, a nuanced judgment that requires time and insight.

Demonstrating Your Ability

As a property developer, showcasing your ability to turn the proposal into a successful venture is paramount. Provide tangible proof, including detailed documentation, images, and endorsements. Understand the importance of personal connections in the lending process and invest time in building a relationship with the lender.

Leveraging Your Advantage

Property developers possess a unique advantage—they have an insider’s understanding of the local market, demand, and operational costs. Once you’ve ensured that all costs align, the focus shifts to highlighting your experience. Utilise visuals, as they can be powerful tools in conveying your expertise, echoing the sentiment captured by the Scottish Bard, Burns: “There is no such uncertainty as a sure thing.”

BLG Development Finance

When seeking property development finance, consider partnering with BLG. Their expertise in financing diverse development scenarios aligns with your goal of presenting a compelling case to lenders. BLG development finance can guide you through the intricacies of the funding process, increasing your chances of a successful deal. Explore how BLG can be your trusted partner in realising your development ambitions.

The Rise Of UK House Prices

The Rise Of UK House Prices

According to data published by the Office of National Statistics (ONS) in March 2022, the average house prices in the UK have increased by 9.6%. This was on average £274,000 which is £24,000 higher than this time last year. According to Zoopla’s data, the typical UK home gained £16,000 in value in 2021, taking it up to nearly a quarter of a million pounds.

When separating the UK, the increase over the year in equates to England £292,000 (9.4%), Wales £206,000 (13.9%), Scotland £183,000 (10.8%) and Northern Ireland £159,000 (7.9%). Research produced by Savills concluded that this annual increase means that, effectively, ‘houses earned more than people’ last year. This is based on the 2021 Annual Survey of Hours and Earnings, that the average UK worker earned £25,971.

Housing Demands

House prices soared during the covid pandemic due to various reasons including stamp duty and the new mortgage guarantee. On 8th July 2020, changes to the tax paid on property purchases were announced. With the knowledge of less overall costs this could have led to sellers requesting higher prices on their properties. In terms of Stamp Duty Holiday, on the 3rd of March 2021, it was extended until 30th June 2021. After which the threshold decreased to £250,000 until 30 September 2021. Yet, tax breaks were originally due to conclude at the end of March 2021.

Buyers therefore rushed their property buying to ensure their purchase was within the deadlines. Thus potentially, affecting the prices within the market. Furthermore, there seemed to be a “race for space” concept. Whereby buyers, surged to invest in larger properties with the new working from home guidelines. Whilst house prices could still stabilise in 2022, demand still remains high.

Will House Prices Drop In 2022?

Rightmove, have reported the number of prospective buyers enquiring about homes was up 15% on this time last year. However, the impact of inflation and the rise in interest rates could still prove to influence the market.

Ross Counsell, chartered surveyor and director at GoodMove, comments “I strongly believe that house prices will finally begin to fall this year. We know the cost of living is continually increasing, with energy prices especially going up in the next few months. With less buyer demand comes lower house prices, and with this in mind, we expect many Brits will have to tighten their belts financially and may not be looking to move home because they may not be able to afford it.”

Development Finance With BLG

BLG are a leading principal lending specialist in property development finance, we are positioned to help you. Providing residential and commercial finance ranging from £1 million to £15 million we have the ideal skill set to lend and advise. Priding ourselves on fast decisions and flexible terms we can aid you through these turbulent times. Contact our financial experts today who will take time to get to know you and your aims.

The Help Provided By The Recovery Loan Scheme

The Help Provided By The Recovery Loan Scheme

The Recovery Loan Scheme (RLS) has been extended until 30 June 2022, find out how with BLG you can grow your business.

What The RLS offers

Back in April 2021, the UK Government launched the Recovery Loan Scheme (RLS). This aimed to support access to finance for UK businesses as they recovered from the global pandemic.

If your business has suffered due to Covid-19, you can apply for the scheme. It can be used for any legitimate business purpose, whether that is cashflow, investment or growth. The scheme is open to all however, be mindful if you have borrowed from any of the other coronavirus loan schemes. The RLS loan is still available to you however, it might change the amount you can borrow.

Originally, the scheme was intended to finish at the end of 2021 however, thankfully for many businesses it has been extended. Within the Autumn Budget 2021, the UK government announced it would extend the scheme until June 2022.

How It Has Helped Business So Far

Research has shown that there are now over 76 accredited lenders that have offered over £1bn to small UK businesses towards sustainable recovery. Additionally, 14% of brokers saw an increase in demand for loans, leading to submitting 50% more applications than previously.

At the time of the RLS Launch, Catherine Lewis La Torre, CEO, British Business Bank, stated: “Businesses up and down the country are beginning to look beyond the pandemic towards the opportunities available to them in the recovery. The British Business Bank is committed to supporting smaller businesses in accessing the finance they need to grow sustainably in the future. In meeting the £1 billion milestone, the Recovery Loan Scheme is demonstrating its impact by helping thousands of companies to fund their further development.”

The Latest Updates

As of the 1st of January 2022, the RLS load has been extended for an additional 6 months. Although, consists of the following changes:

  • The scheme will only be open to businesses with a turnover not exceeding £45m per annum
  • The maximum amount of finance available will be £2 million per business (maximum amount per Group limited to £6m)
  • The guaranteed coverage that the government will provide to lenders will be reduced to 70%

How BLG Can Help You

If you are looking to refinance previous loans or need extra help financing your development project, BLG is here for you. As an accredited lender, specialising in property development finance across the UK. We can help you with the financing needs of your projects.

We are specialists in property development finance, both residential and commercial. Our dedicated team of more than 300 years’ experience can guide and advise you in the best direction. Supporting all regional developers, unlike high street lenders, providing flexible terms and fast decision making.

Contact us today to take full advantage of the RLS loan until it finishes in June 2022.

Stuart’s blog: Interest rates – it is all a matter of perspective

Stuart’s blog: Interest rates – it is all a matter of perspective

Two elderly mayflies were chatting: “You don’t get Sun now like we used to. When we were lads we used to get proper yellow Sun, not this red Sun – and it was much higher in the sky”*

For us of course: Tomorrow is another day and the Sun will again be golden yellow and high in the sky! But for the mayfly, that day is their universe. It really is all a matter of perspective!

Much could be said the same as the current interest rate environment. Two rate rises have happened in the last three months and the consensus is that the Bank of England will make three or four more increases this year. This marks the most significant and rapid change in interest rate policy in over 10 years.

But even after taking into account these increases, the current interest rate cycle is likely to peak at between 1.5% and  2%. Whilst interest costs are an important part of the development cost stack, the forecasted rates are a far cry from the peaks of prior cycles and the sun will keep rising!

 

Stuart Parfitt, Managing Director, BLG Development Finance 

 

*with credits to Terry Pratchett – Reaper Man    

UK Housing Market Predictions for 2022

UK Housing Market Predictions for 2022

2020 and 2021 have been turbulent, to say the least. With the coronavirus pandemic, Brexit, and COP26 influencing housing policy nothing has been predictable. However, the UK’s housing market has remained remarkably resilient. For both property investors and homeowners, bricks and mortar have still remained appealing for investment.

Although, people’s emotive buying behaviour has changed due to covid. Both estate agents and builders have seen a growing trend for properties as people reassessed their housing needs, especially during the lockdown. Once before city centres, good facilities, shops, and restaurants were a priority. However, research has found individuals are now moving towards more rural and urban areas. It was found that 10% of British people have moved away from a city due to the coronavirus pandemic. Additionally, 24% considered the move with 44% saying the pandemic has made city living less appealing. Research conducted by Zoopla concluded that 22% of individuals were ‘eager’ or ‘very eager’ to move home within the next 18 months as a direct result of the pandemic.

Is There A Fall Within The Property Market On The Horizon?

With the enforcement of working from home, many office workers are now looking for a more suburban lifestyle with greener and space to settle. This has then left many office spaces have been left empty. Additionally, this trend will continue to grow as businesses become more flexible and accustomed to this way of working.

However, due to the end of furlough, rising inflations, the final stamp duty holiday ending, increased tax, and increased living costs, it is predicted that there may be a fall on the horizon. According to the latest HM Land Registry UK House Price Index report, house prices increased by 2.5% between September and August. Reporting there was an annual increase of 11.8% equating to on average £269,945 in September. Across the UK, the North West showed the greatest growth rate of 5.3% with London being the hardest hit throughout the pandemic.

Rightmove’s director of property data, Tim Bannister, stated there will be “A return to a less frenetic property market due to more choice, and forecast slightly higher interest rates, will suit many movers who have held back during the last 18 hectic months.” While Zoopla claims “House price growth is forecast to run at 3% by December 2022, in comparison to a rate of more than 6% now.” Therefore, resulting in 20% fewer property sales. Add this to the short supply of building materials due to Brexit and COVID, will the market change in 2022?

House Prices In 2022

According to Athena Hubble, managing director of property portal Boomin, “Looking ahead, there is likely to be an impact from the end of the Government furlough schemes over time, that could trigger more homes coming to the market, with downsizing and selling off from rental homes as key drivers. Financial impacts are likely to see rental demand continue to grow with rentals now cheaper than buying (outside of larger deposits). However, demand is likely to continue to support price inflation, delivering a lower but consistent rise across the UK in 2022.”

How Can BLG Help?

As a principal lending specialist in property development finance, we are positioned to help you. Providing residential and commercial finance ranging from £1 million to £15 million we have the ideal skill set to lend and advise. Priding ourselves on fast decisions and flexible terms we can aid you through these turbulent times. Contact our financial experts today who will take time to get to know you and your aims.

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