Property Investment: New alliances

It’s been a serious relationship. You’ve been together years and while you’ve had your ups and downs it’s pretty much all you’ve known. But the fact is, it’s time to break ties. You’ve come to the end of the road. Yes, you need to face facts, your relationship with your high street bank is over.

For years high street banks have been the first port of call for developers. And for the most part that has worked well. OK, the high street has never exactly been known for its speed and efficiency but for a time lenders were willing to support business.

That all changed, of course, when the credit crunch hit. Suddenly property finance of all types was deemed too risky and SME developers were amongst the hardest hit.

New builds weren’t selling, particularly new build apartment blocks. The mortgage market had ground to a halt so nobody could afford to buy. As such countless new developments across the country were left empty. And naturally lenders saw red.

As the market recovered high street lenders softened their approach to big name developers – believing their experience and standing in the market was probably enough of a guarantee to mitigate any risk. But new kids on the block and small firms still struggled. And do to this day.

Mainstream lenders don’t believe they get enough profit from smaller developers to warrant the risk.

That’s why small scale developers need to bid a fond farewell to the high street and instead turn their attention to challenger banks and specialist lenders.

There are a number of lenders operating in this space with wide ranging solutions to suit all needs and challenger banks operate a very different risk curve to the high street.

It’s time to embrace a new relationship with specialist lenders. You’ll be very glad you did.

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