UK house­builders find lenders more cau­tious af­ter Brexit vote: Sur­vey

Kuwait Times - - BUSINESS -

LONDON: UK house­builders, par­tic­u­larly those op­er­at­ing in cen­tral London, are find­ing lenders are giv­ing out less fi­nance for new projects since Bri­tain’s vote to leave the Euro­pean Union, ac­cord­ing to a re­port by prop­erty con­sul­tant Knight Frank. Height­ened cau­tion among lenders is caus­ing many to scru­ti­nise deals for longer and re­duce the amount of their lend­ing by 5-10 per­cent of the project cost, Peter Ma­callan, head of struc­tured de­vel­op­ment fi­nance at prop­erty con­sul­tant Knight Frank told Reuters.

“So what that means is that ef­fec­tively de­vel­op­ers are hav­ing to put more cash equity into the deals up­front, giv­ing lenders a bit more com­fort in an un­cer­tain mar­ket with Brexit, the US elec­tion and what de­mand for UK hous­ing stock is go­ing to look like in 3-5 years,” Ma­callan said.

The Res­i­den­tial De­vel­op­ment Fi­nance Re­port 2016/17 by Knight Frank, which sur­veyed the in­dus­try’s 50 ma­jor op­er­a­tors, said over a quar­ter of re­spon­dents ex­pected the loan-to-value on de­vel­op­ment projects to fall. The re­sult could be that builders of­fer big­ger dis­counts to cash buy­ers to lure land­lords and over­seas buy­ers that might have lim­ited pur­chases due to Brexit un­cer­tainty and an in­crease in tax on buy-to-let and sec­ond homes.

UK prop­erty was the hard­est hit sec­tor im­me­di­ately af­ter the Brexit vote, but new homes de­mand in most of Bri­tain, in­clud­ing outer London, has re­turned af­ter an ini­tial dip, ac­cord­ing to builders and sur­veys. Cen­tral London though re­mains a weak spot, with prop­erty prices fore­cast to fall and housebuilder Bar­ratt hav­ing cut prices of some of its ex­pen­sive homes. The pace of build­ing in this re­gion has al­ready slowed.

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