After four decades in banking and 35 years dedicated to property finance, few people can speak about the evolution of development lending with the same perspective as Neal Moy, managing director of development finance at Paragon Bank.
Sitting down with The Intermediary, Moy reflects on a career shaped by cycles of boom and bust, his path into property lending, and how Paragon has positioned itself at the centre of a changing market – balancing tradition with innovation across sectors such as build-to-rent, student accommodation, and residential development.
Path to Paragon
For Moy, a four-decade career in banking has been defined by depth of experience and adaptability. From the UK’s biggest high street names to specialist foreign lenders, he has seen the industry evolve through cycles of expansion, contraction and reinvention.
“I’ve been in banking for 40 years and 35 of that has been in property lending,” Moy begins.
“I’ve worked for various different banks over time, including Barclays, Lloyds and RBS, as well as boutique type organisations and foreign banks. I originally started in property ironically with an Australian bank called Westpac.”
Those early years, he says, were an education in navigating uncertainty. The late 1980s and early 1990s were, as he puts it, “quite a weird time because it was a period of recession, boom and bust”.
That grounding in volatility would shape his understanding of credit risk and the importance of disciplined lending – lessons that still resonate today.
His route to Paragon came later, following a turbulent period for the wider finance market.
He explains: “Ultimately, I joined Paragon because previously I’d worked for a peer-to-peer lender during COVID that was ultimately sold. The development loan book we’d funded to that date was sold to Shawbrook and we spoke to a few organisations during that process, including Paragon. So, after the sale was completed, Paragon asked whether I would like to join. That was four years ago.”
Diversifying into new territory
Under Moy’s leadership, Paragon has steadily broadened its development finance offering, extending beyond traditional residential lending into the Build-to-Rent (BTR) and Purpose-Built Student Accommodation (PBSA) sectors. The strategy reflects both a response to market demand and a recognition of the structural undersupply in these specialist areas.
“Paragon acquired Titlestone in 2018, which had built a track record in funding student schemes,” he explains. “There was a group of people within the team who joined Paragon as part of the acquisition who have extensive experience in that sector. It was always benchmarked against a lack of supply of new build in the market. So, we’ve managed to continue that approach with a lot of established builders in the PBSA space.”
Moy says that while the fundamentals of the student market have remained solid, a shortage of suitable accommodation continues to underpin investment appetite, particularly in major university cities.
He notes: “There remains an undersupply, which a sluggish and confusing planning system contributes to. But we continue to trade off the back of well-established relationships with student developers and the skill and ambition among developers to deliver student housing supply is there. It just needs the right investment and, of course, support from local planning authorities.”
While student accommodation remains a growing component of Paragon’s portfolio, the bank’s foray into Build-to-Rent is opening up new opportunities.
The shift, Moy explains, was in many ways a natural evolution accelerated by societal change. “We really went into that market on the back of COVID, because we saw a sea change in people’s mentality. Do you want to buy? Do you want to rent? A lot of younger people like renting because mortgage costs have been rising and because they’ve been through the student experience of living together under one roof. But I think, again, we come back to the fact that there’s not enough houses in this country.”
The sector’s appeal, he continues, lies in both its resilience and its maturity. With demand from renters showing no sign of slowing, institutional investors have increasingly turned their attention to BTR assets.
“BTR has become an area that is very well accepted in terms of people that want to rent the space,” Moy says. “But also, more importantly for us, is the exit on the other side.”
He adds: “We are there to help facilitate the build. And sometimes we stay in for a period of what we call stabilisation, whilst the rental income starts to mature over a year or 18 months. And then we look for the client to exit on longer-term refinance. The refinance market is still very, very good and is still very popular for the better schemes.”
Still, challenges remain. Moy is quick to point out that regulatory complexity continues to slow delivery, particularly around building safety compliance.
As he explains: “BTR is an interesting one because it’s suppressed slightly by the Building Safety Act, for anything built higher than 18 metres. There’s, understandably, increased legislation when it comes to fire issues, but it has resulted in additional hurdles developers have to go through. Gateway 2 and 3, for example, are very onerous for smaller developers, typically operating on smaller margins, in comparison to bigger players.”
Those hurdles are often exacerbated by resource shortages across the industry.
“Local planning authorities lack experienced people who can look at schemes to sign them off,” he says. “Developers might have to wait 12 weeks before anybody looks at it, then after an extra 12 weeks on the process and they go through it again and hopefully then get sign-off.”
Supporting the SME backbone
For all of Paragon’s diversification into specialist sectors, Moy is clear that the heart of the business remains unchanged. The bank’s core purpose continues to revolve around supporting SME residential developers – a part of the market he believes is both vital and increasingly under strain.
“Residential is our bread and butter. It’s around three quarters of our loan book. We continue to support many builders across the country and that won’t change,” he says firmly.
Moy positions Paragon not as a faceless lender chasing short-term opportunities, but as a long-term partner focused on consistency and trust. He emphasises the value of enduring relationships in a sector where timing and reliability are everything.
He notes: “We’ve always said that we’re a relationship lender. It’s not transactional.”
Indeed, well over half of Paragon’s clients are repeat borrowers – a figure that speaks to mutual confidence built over years of collaboration.
As Moy highlights: “They know that we perform, they know that we’ve always delivered. And as I say, we’re not transactional. It’s all about making sure that if we say we’re going to do something at the outset, we follow it through.”
That steady, partnership-based approach is increasingly important as the SME developer market contracts. Moy worries about the long-term implications of a shrinking independent housebuilding base.
“In about late 80s, early 90s, 45% of the houses in the country were built by SME developers. It’s now as low as 10%,” he says, describing the statistic as a sign of how difficult conditions have become for smaller builders.
In an environment shaped by planning delays, higher costs and tighter cashflow, he notes that Paragon’s role is often one of enabler and advocate.
Through patient lending, open communication and practical flexibility, Moy and his team aim to ensure that SMEs – and by extension the backbone of the UK’s housing delivery – can continue to play their part in tackling the nation’s chronic supply shortage.
The planning problem
Few topics ignite as much frustration in the development world as the planning system – and for Moy, it remains the single biggest barrier to unlocking new housing supply.
When asked what stands in the way of the Government’s ambitious target to deliver 1.5 million homes in this parliamentary term, he doesn’t hesitate to identify the root cause: “I would say there needs to be more accountability. There’s a disconnect between what the central government says and what happens at local level.”
For Moy, this lack of joined-up responsibility has created a culture of inertia. National housing ambitions, he argues, are too often lost in translation once they reach local authorities.
He says: “They can always hide behind the fact that ‘my local constituents don’t want this’ or ‘I can’t do this because there’s not enough funding in the council’. There are always obstacles.”
The result, he says, is a system mired in delay and indecision, where developers face months – and sometimes years – of uncertainty.
He notes: “You’ve got to have an accountable process. Otherwise, how do people have faith in the system? Everything just drifts. And for a house builder, that’s debilitating.”
The fact that such a high proportion of applications are only approved on appeal, he suggests, is evidence of a planning system that has lost its balance, having morphed into a system where bureaucracy and local politics outweigh the country’s urgent need for housing.
When it comes to reform, Moy believes the shift must be as much cultural as procedural: “I think you’d have to train people into saying yes rather than no. We should be Yimbys, not Nimbys.”
The new norm
For Moy, navigating today’s housing market is as much about perspective as it is about performance. Decades in banking have given him a long view on cycles of change, and while the current environment poses challenges, he remains measured in his assessment.
He says: “On the mortgage side, I think we are seeing an uptick in mortgage approvals. On the flip of that, we’re not seeing as many mortgages being drawn. I don’t think, in all honesty, that’s one of the key drivers, because in relative terms, mortgage rates are low.”
In other words, buyer sentiment – not affordability alone – is the real drag on transaction levels. While the headlines often focus on higher rates, Moy argues that the market has simply entered a new equilibrium.
He remembers a time when homeownership was far more expensive. “Mortgage rates went up to 15%,” he recalls, referencing the volatile early 1990s. Perspective, he suggests, is key to understanding where we are now.
He adds: “You just have to get used to what is the new norm. I think the new norm is rates of 4% or 5%.”
This pragmatic outlook extends to the construction side of the market too. After several years of supply chain disruption and material shortages, Moy says the situation has improved considerably.
“It’s definitely stabilised,” he notes, “We went through a couple of years where it was much higher than broader inflation, and we got into 20% to 25% cost increases. Now it’s come back to more in line with wider inflation, which is positive.”
Yet even as costs settle, developers continue to face pressure from regulation. Energy efficiency standards, environmental targets and sustainability goals have all raised the bar for what a compliant new build must deliver, and with it, the cost of construction.
Moy adds: “A couple of years ago, getting into technicalities, the building regulations changed and the need for greater insulation, green efficiency and sustainable homes elevated. The Government then brought in Future Home Standards and that’s again elevated the requirements, all of which cost money and that’s the burden on the developer.”
For Moy, this constant recalibration is part of the modern development landscape, which constitutes a balancing act between maintaining profitability and adapting to what he calls the “new norm” of a more tightly regulated, more sustainably-focused housing market.
Sustainability with substance
That balance between regulation and commercial realism extends into Paragon’s approach to sustainability. For the bank, this isn’t a marketing exercise or a passing industry trend; it’s a principle woven into how it approaches development finance.
Moy is quick to make the distinction between token gestures and tangible action. He says: “We’re very much a bank that promotes sustainability. I think from our perspective, what we’ve tried to do is encourage developers to build greener homes.”
That commitment has been translated into practical incentives that drive measurable outcomes. The bank’s Green Homes Initiative product exemplifies this philosophy, rewarding developers who go beyond minimum standards.
Moy explains: “If you build 80% of your units to EPC A standard, we’ll give you a discount on your borrowing rate or exit fee as we call it. They’re encouraged to build green. We’ve now committed to over £300m of funding for those schemes.”
By linking financial benefit to environmental performance, Paragon aims to shift behaviour in a way that benefits both the developer and the wider market. “We’re encouraging the developer to build greener. If they do, then they get a discount. So, we’re sharing in the cost of building greener. We’re giving them something back,” Moy notes.
The initiative, he adds, reflects Paragon’s broader recognition that sustainability and commercial viability must go hand in hand. Incentivising greener construction helps to offset the higher upfront costs of meeting tighter environmental standards – a challenge that many developers continue to face as regulation evolves.
Looking forward
As market conditions show early signs of stabilising, it is clear that Moy and his team are turning their attention to growth, both in scale and in scope. The goal, he says, is to ensure Paragon remains agile enough to support developers through the next phase of the cycle, with lending structures that match the ambition and resilience of its clients.
Moy explains: “We decided that we will increase our maximum loan so we can lend more to a developer on a single scheme or multiple schemes. Historically, we capped out at £35m. And the plan is that we are going to go up to £60m for any developer.”
The move reflects the bank’s growing confidence in the market and its clients. Larger, more complex projects – particularly in the residential, student and Build-to-Rent spaces – demand greater funding capacity and flexibility. By increasing its lending limits, Paragon aims to support developers as they take on projects with higher end values and broader scope.
Alongside greater capacity, Moy emphasises the importance of continual product evolution.
He says: “We will come back probably in the next couple of months and announce that we’ve got some extra products that we can offer to developers. And it will add to the residential, student, build to rent and commercial that we already do. We want to widen the product and help people build more.”
It is a forward-looking agenda rooted in a familiar principle: partnership. For Moy, collaboration and open dialogue remain the foundation of Paragon’s approach to lending. He notes: “We’re a lender, and the reality is, we both profit from the fact that the units get built and are then available for sale.”
Indeed, it is that sense of shared purpose that runs through every part of the development process. Moy concludes: “We’re there to try and help along the way to navigate some of the issues that they’ve experienced over the last five to six years. It’s all very much about communication, talking to people, making sure we’re there to help them out.”
