Aldermore increases property development loan limit

Aldermore increases property development loan limit

Aldermore has more than doubled its maximum property development loan size from £10m to £25m with immediate effect.

The move comes on the back of increased demand from developers who are looking to borrow through tailored financing facilities and is part of the bank’s strategy to further increase its support for UK housebuilders in 2018.

The new limit will allow SME developers, who often struggle to gain financial support, to secure the right funding to help them meet the growing demand for new homes across the UK.

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Simon Knowles, head of property development at Aldermore, said: "We have seen a growing demand from existing and new customers for larger loan limits and we are delighted to provide them with a significant increase with immediate effect. 

"Alongside this, our personalised underwriting service will continue to ensure that our customers receive tailored support to suit their individual needs.

"It is vital that banks offer the necessary financing to SME developers to help them meet the growing demand for new properties and tackle the significant housing shortage in the UK, and Aldermore is very much committed to playing its part."

Since 2012, Aldermore's property development division has enabled smaller developers build more than 5,000 homes, as well as offering a personalised underwriting service ensuring all cases are individually assessed.

Ray Boulger, senior technical manager of John Charcol, said the major developers have been the prime beneficiaries, along with a high proportion of their customers, of the Help to Buy Equity Share Second Charge scheme and most are enjoying huge profit margins of around 20 per cent and are cash rich.

He said they are now building a similar number of homes to the numbers prior to the banking crisis but the number constructed by SME builders is still a long way below levels of 10 years ago and this is primarily because of a lack of finance.

With Aldermore having more than five years of experience in providing development finance, Mr Boulger said it is excellent news for SME builders that it now feels confident enough to increase its maximum facility from £10m to £25m.

Mr Boulger said: “This will enable SME builders to consider larger sites and help to boost their share of the market.

"It appears to be the larger developers, which have perpetrated the various leasehold scams but nevertheless I suggest as part of its due diligence Aldermore should insist on seeing a sample sale contract and decline to provide finance if the contract includes a leasehold element with onerous terms.

"This will not only provide good PR for Aldermore but also be part of the process of helping it to inadvertently provide finance to any SME with dubious moral standards."