Blend exec calls for “overhaul” of Northern Ireland development finance
Blend Network’s Northern Ireland lending manager Philip Anderson has called for an “overhaul” of development finance in the market.
Anderson was appointed to lead Blend’s Northern Ireland lending operations, when its first Northern Irish office was launched in May.
The specialist development lender had been funding small- and medium-sized enterprise (SME) property developers in Northern Ireland since 2018 but decided to step up its presence in the region after witnessing strong growth in the property market over the preceding 12 months.
“What happens in Northern Ireland is that the number of houses being built and delivered is much lower than what it should be,” said Anderson in a blog post on the company’s website.
“The Minister for Communities Deirdre Hargey has spoken of the need to deliver 100,000 homes over a 15-year period. However, the total number of new dwelling completions in Northern Ireland in the first three months of the year plummeted to 1,571. Funding, or rather the lack of it, is a key challenge for Northern Irish developers.”
Anderson pointed to the latest Nationwide House Price Index data, which showed that over the past 12 months, Northern Ireland saw a 14.3 per cent increase in the price of former owner-occupier houses, the largest increase across all the UK regions.
“Compared to pre-pandemic levels, the price of former owner-occupier houses in Northern Ireland has rocketed by a third, far above the house price increase witnessed across any other region of the UK,” he said.
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As such, Anderson called for an “overhaul” of the development finance market, arguing that specialist lenders such as Blend are well placed to lead the change.
“Most challenger banks offer very similar products, which incidentally do not cater particularly well to the needs of modern and experienced property developers because they don’t offer enough gearing and instead offer very conservative terms,” he said. “As a result, when a property developer needs more gearing, the challenger banks are not happy to take the extra risk and can’t really price it either. So, the deal ends up either not happening or going to the non-bank lenders.
“These types of lenders are unregulated and can carry risks. The UK non-bank lending market is extremely fragmented and inefficient, where lenders offer terms that are everything but transparent. Developers are not even treated well in this market.”
He said lenders such as Blend can offer higher gearing than challenger banks and are backed by committed funding lines from family offices and institutional investors. This enables them to provide a flexible source of capital, which Anderson argued is what developers need.
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