Bank lending to property developers has halved over the
last two years, making it more difficult for companies to kick-start schemes
that could help ease the housing crisis. Bank finance has dropped from £34bn in
January 2014 to just £16bn the same month this year – with bridging finance or
auction finance particularly hard to come by. These are usually short term
loans used to take ownership of a property before obtaining a traditional term
loan or mortgage. However, without access to this type of finance developers
cannot take projects beyond the planning stage. Banks are happy to offer long
term mortgages and term loans secured on property but see the short-term loans
as too risky. As a result alternative lenders, who can make quicker decisions
and have different lending criteria to banks, are stepping into the lending
gap. Read more on the City AM website.
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