New research commissioned by secured property lender Fitzrovia Finance reveals that 37% of real estate professionals believe property developers will find it harder to secure funding from banks over the next two years, compared to just 27% who think it will become easier
This helps explain why 60% believe property investment platforms and challenger banks will take market share from traditional lenders in the property development finance market.
Of those who believe it will become harder to secure property development finance from mainstream lenders, 82% said it will be because of difficulties caused by Brexit, and 55% said it will be due to the financial health of mainstream lenders coming under greater pressure.
In the first six months of this year, Fitzrovia Finance achieved a 149% increase in property funding on its site when compared to the same period in 2018. The company has a highly experienced team with a very strong focus on risk, which means it rejects around 80% to 90% of loan applications. To date, it has not experienced any defaults.
Brad Bauman, CEO, Fitzrovia Finance, said,
“Property investment platforms are growing their market share of the real estate development finance market and our research suggests this could be further fuelled by traditional lenders becoming less able to lend in this sector. While, there are many different property investment platforms for investors to choose from, they need to ensure they are comfortable with the ones they use in terms of their experience of the real estate market, their focus on risk management and their track record for delivering competitive risk-adjusted returns.”
Fitzrovia Finance launched to institutional investors in Sep 2017, and in May this year it opened its door to private investors who, from an investment of £1,000, can benefit from risk-adjusted attractive returns of up to 5.5% p.a. These are derived from investing in loans to carefully selected property developers, secured on quality properties with first charge security and in excess of 150% asset cover. This means that every £100 loan, is secured against £150 of bricks and mortar assets.
To date it has entered into more than £120 million of loans, with no defaults.
Fitzrovia Finance focuses on providing investors, with the enhanced reassurance of a business built and run by a highly experienced, expert team operating a ‘7 Step Risk Control’ process developed over many years of success in property lending.
Through Fitzrovia Finance, private investors can now join institutional investors earning attractive returns – currently up to 5.5% p.a. – from secured property lending. Fitzrovia Finance’s lending is focussed on residential and commercial property developers, with a strong record of successful projects. Typical loan durations are 12 to 48 months and the maximum loan to value is limited to 65% or less of development value, helping further to control risk.
Fitzrovia Finance competes with mainstream lenders, including the major banks, to lend money to established, experienced property businesses looking to borrow for projects of between £1m and £15m.