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Fall in Developer Lending Helping to Drive Private Rented Sector

A decline in the level of finance available to property developers from banks is limiting opportunities for home ownership a new report has found.

Developer Finance Halves in Two Years

A decline in the level of finance available to property developers from banks is limiting opportunities for home ownership a new report has found.

New research from Funding Options has found that the level of finance available to property developers has fallen by half from £34 billion to just £16 billion over the course of two years, limiting the capacity of developers to bring new homes to the market.


The figures, from January 2014 and January 2016 respectively, highlight the increasing difficulty that many developers are having in obtaining short term loans, allowing them to achieve full ownership of a property before progressing beyond the planning stage of their projects.


With banks considering short term loans to developers as being too risky a prospect, Funding Options’ chief executive Conrad Ford said: ‘Property developers need finance to start projects and most traditional banks are unwilling to provide it.


‘The UK desperately needs more new homes as many potential homebuyers are being effectively priced out of the housing market.’


An undersupply of properties in the UK has been one of the main driving factors for the growth of the private rented sector over the past decade, with PWC suggesting that the PRS may overtake owner occupied property as the main property type in the UK by 2025.

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