A specialist mortgage packager has seen a ‘massive increase’ in demand for development finance as property investors go in search of higher yields.
Crystal Specialist Finance (CSF) announced plans to tap into the growing property development finance sector - covering new build projects, redevelopments, major renovation works and general refurbishments - in April this year.
The sector has seen rapid growth in recent years, with lenders increasing annual development lending by more than 140 per cent between 2012 and2014, according to a review of the sector by the Investment Property Forum.
CSF managing director Jo Breeden told FTAdviser the move had paid off, as the cooling buy-to-let market has served to push investors into more niche areas of the market.
“It is definitely a great decision we have made, and over the next 12 months we will be making sure the department is ahead of the game,” he said.
“We have already made one key appointment and will have another two starters by the end of the month [June] just to keep up with demand. We have seen a massive increase.
“It is definitely the way the market has moved and will continue to move while there is a shortage of housing and a restriction of traditional investment.”
Mr Breeden warned brokers could be missing out on business by failing to engage with the burgeoning sector.
“Development finance and refurb - people should not be discarding these, and we can help with their knowledge base and an education piece,” he said. “Brokers have to look at diversifying and looking at opportunities.”
While many indicators point to a housing market languishing in the doldrums, changes to mainstream lending have led to growth in more niche sectors.
So far this year, the company has recruited eight new joiners to meet the increased demand for new business.
CSF has also benefited from an increase in limited company applications following tougher regulations on the buy-to-let market, as the company has been dealing with such applications for decades.
simon.allin@ft.com
