Bridging lender TAB has said it will originate £100m in development finance within the next 12 to 18 months.
TAB said it will put a particular emphasis on lending to the sub-£5m section of the market which it says is currently underserved by rival lenders.
The lender has originated over £100m of bridging loan investments since its foundation in 2018.
TAB’s property development finance is short term-funding for projects based in London and is aimed at unlocking capital to help ground-up developments as well as conversions, heavy and light refurbishments, and finish and exit property projects. Its development finance product starts from 0.9% per month, with a minimum loan of £250,000 and maximum loan of £10m.
The loan to gross development value is up to 65%, and term is maximum 24 months and the exit fee is one percent of gross development value.
Duncan Kreeger, TAB’s founder and chief executive, said: “There are two reasons to do this. First, we want to help customers with whom we have an existing relationship.
“Second, there’s a gap in the market. Fifteen years ago, this space was dominated by the big banks. That’s all changed now – high street lenders started getting cold feet about development finance after the sub-prime crisis. Covid-19 has been the nail in the coffin. The few banks that are still lending are relying on old, outdated technology and systems. They’re slow. You get the impression they don’t really want to do deals.
“The sub-£5m segment is particularly under-served and we think developers will like to see a new lender in the market, one that’s trustworthy, transparent, and capable of working to tight deadlines. Given our pace and the fact we will not be competing with established brands, I like our chances of quickly making a big impact on the market.”
“While we’ll fund conversions, heavy and light refurbishments and finish and exit property projects, I’m particularly excited by the prospect of becoming part of a moment that’s set to offer ground-up house building a massive booster shot,” he added.
It is estimated that 345,000 new homes need to be built every year and Boris Johnson has set a target to build 300,000 homes in England each year by 2025. But far fewer homes are being built: 244,000 homes were built last year.
