There have been several high profile lenders withdrawing their funding lines recently and this could be a concerning trend in the year ahead, particularly for those brokers who are not “close” to their lenders.
When a lender has funding problems developers can be left high and dry as a project is well underway and fees have been paid and the developer is fully invested in the scheme.
The issues seem to be around how these lenders are funded and not having sufficient funds to lend, as a result of either institutional backers uncertain of the lenders’ business model or economic outlook in their sector, or problems with private individuals having a lack of confidence to invest in lenders for a suitable return.
The implications for funding issues can transpire as the transaction progresses as criteria changes, rates and fees increase or administrative delays. If the lending is refused at the eleventh hour, this can cause a real headache for the developer or even put the whole project in jeopardy.
It’s imperative, therefore, that developers work with brokers who can help with sourcing lenders, who are not only capable and willing to progress the finance but also have the funds available to deliver as the project completes.
It’s important to know the source of funding from lenders and to undertake due diligence to check where the funds are coming from, and that the funding is sustainable.
As members of the NACFB, FIBA and regulated by the FCA, Positive work to their codes of conduct to ensure we work with lenders who have secure funding lines and can guarantee the finance agreed is in place for when a development completes, providing peace of mind for our clients.