John Waddicker: Keep it local

John Waddicker: Keep it local

Amongst the development finance lenders who do truly cover the whole of the country, there are a number of lenders who prefer to focus on their own ‘patch’ .


Amongst the development finance lenders who do truly cover the whole of the country, there are a number of lenders who prefer to focus on their own ‘patch’. We all know that there are an abundance of lenders who will only lend within the M25, and indeed a handful who will only consider Central London, but did you know there are lenders who will only lend in other areas of the country?

Some of the mainstream lenders who previously had a defined region have recently begun to drift further afield, and have taken on regional BDM’s to signify their intent in venturing in to pastures new. So what’s the problem as long as the lender has a representative who covers the area? Well, it is quite likely that the rep isn’t actually based in his or her appointed area, and even if they are, do they truly have local knowledge if the area they actually cover is vast?

Local knowledge is essential, and whilst the not-so-local can ultimately rely on a surveyor’s PI insurance to under-pin the report, the surveyor might not be able to provide insight into the history of the site and whether or not there is a stigma attached to it, nor could they provide truly reliable guidance for an achievable price, if comparable sales evidence is lacking. I’m sure many applicants and introducers have been left feeling disappointed where a property value comes back lower than what was anticipated because there is no supporting evidence which the valuer can hang his/ her hat on. Many a conversation has been had with experienced developers who have been willing to put his/ her neck on the line with their next (local) proposed project for it to come to a grinding halt on the mainstream lenders receipt of the valuation report.

A local lender can react quickly, and can often be more flexible, given a certain level of comfort. One such development finance lender recently provided a construction facility against an unencumbered ex-pub, which was to be converted to mews houses. No major structural works were required, and a relatively straight-forward internal conversion meant that the lender did not require monthly QS inspections so costs were kept to a minimum. They were happy to rely on the client’s own monitoring, given he was an architect, and the client was left to his own devices. The site was visited by the lender frequently, but at no cost to the borrower.

Valuation and QS panels are not as defined with some private lenders, and so a carefully chosen valuer, again, with that local knowledge, can heavily influence the viability of the project.

Specialist regional lenders are also more likely to consider projects which would probably fail on initial inspection from most mainstream lenders. Planning consents with holiday restrictions or fractional sales proposals are not well received by most lenders. Those with local knowledge are more likely to take a commercial view based on the security, as opposed to dismissing a proposition which has a feature falling outside of any rigid policy.

Most developers and intermediaries would probably be surprised by the funding options out there. If you are struggling to place a project which falls outside of criteria for the current lender, speak to an experienced broker to establish what the alternatives are. You never know, your next funding partner might be just around the corner!

Attributed to John Waddicker,

Positive Commercial Finance

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