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Land Development Prices on the Rise

19 November, 2020

Ensure your development meets buyers’ expectations in a post-Covid era

MSP’s Chris Wright, Valuation Surveyor shares an update and his views on the rising prices of development land

As we entered the start of 2020, which feels like a lifetime ago now, it was immediately apparent that there was a real energy in the property development market both in terms of land deals and sentiment. The subsequent interruption caused by Covid-19 then slowed transactions of development land significantly, as fewer new sites were brought to the market than normal. Although land deals continued to progress during the lockdown period, they continued at slower rates, and we also saw bid deadlines being extended.

However, following the end of the national Covid-19 lockdown, we’ve certainly seen evidence of a sharp rebound in land values, particularly as supply levels remain at, or near to, current low levels.

 

Shorter supply ensures higher competition and inflated land values

Some housing associations have been competitively bidding for land, supported by grants, while others direct funding towards the improvement of existing stock. Despite many housebuilders being constrained by lack of staff resources throughout lockdown, appetite for the right type of site hasn’t waned and many now have a greater workforce to look at new land opportunities.

 

Radical reform from the Government needed to support SME developers

Partly as a result of the effects caused by this pandemic, the Government has promised radical reforms to the planning system to get Britain building again Keeping Britain Building. Although some changes have already been announced, much more still needs to be done to encourage and support SME developers. Within the planning system itself, there appears to be a log-jam with planning applications being delayed and fewer new proposed sites receiving the green-light. Those who are fortunate to currently have consented development sites to sell, are in some cases, hoping to capitalise on a competitive market. In addition to this, many new sites that had been planned to be launched for sale have subsequently been held back, thus keeping an already low supply, at an even more minimum level. The lack of such sites thus inevitably inflates land values.

This certainly appears to be the case along the South Coast for where MSP predominately operate, as there remains a shortfall of housing land. As and when the planning system does become easier though and new sites come to the market, land values are likely to drop slightly and hopefully stabilise once again.

 

MSP Capital Development

A room with a view inspires a positive outlook moving forward

There are reasons to be optimistic moving forward though. As a consequence of the pandemic, there has been a notable increase in the desire for some to move out of the main cities and into the suburbs or rural areas, which is thus helpful to those developers operating in these markets. With many developers returning to the land market as lockdown measures are lifted, those smaller, easily deliverable sites in prime locations, without large infrastructure costs, will be the first to benefit from this increase in demand.

If you’re currently looking over your options for your next build and wondering which property type to focus on, it’s definitely worth taking five minutes to look at the results of Knight Frank’s customer survey to ascertain what people are looking for in their future homes post-Covid lockdown.

 

Developers Take Note: How to maximise your development potential to meet the needs of the post-Covid era buyer

Knight Frank took a survey of 700 clients and reported the results post the major lockdown period and found the following:

After a period of confinement, the message, not surprisingly, is that buyers want space. Some 45% of respondents say they are more likely to buy a detached family home than they were prior to Covid-19, with waterfront homes (40%) and rural homes (37%) also in favour.

33% are more likely to want an annex for family members, or at least extra rooms to accommodate

64% stated that they were likely to continue working from home post pandemic so room for an office space is now essential

Throughout lockdown, those who were without gardens or balconies are considering a move with an outdoor area as essential

When researching what a brand new post-Covid house might look like for buyers, the following aspects have also been highlighted as important across numerous articles in the press:

  • An extra bedroom in case of contracting the virus to self-isolate within
  • Close proximity to amenities in case of another lockdown where the use of vehicles are not permitted
  • Good sources of natural light
  • An energy efficient home, to keep bills as low as possible in the event of working from home or another lockdown

Privacy has also been stated by many to be a main ‘want’ on their list. Especially households with children. Having that extra space to have a moment of peace or a playroom for separate activities is high on people’s agenda

Keeping Britain Building

19 November, 2020

Development and Bridge Finance to Keep Britain Building

Every developer is keen to move seamlessly from one project to the next and having finance tied up in a completed scheme whilst wanting to move forwards with a future one is both frustrating and restrictive. MSP Capital recognise the benefit in supporting clients at this time; providing ultra-competitive, fast development exit bridges to release equity is just one of the many ways we look to say ‘yes’ to our clients.

 

Bridging loans are a key element of our everyday work at MSP. With rates from as little as 5.49% per annum for the completed residential stock, turnaround times within three weeks, and a dedicated relationship manager, we are here to say ‘yes’ and keep Britain building.

 

Development finance is our bread and butter [or our bricks and mortar, excuse the pun] product. From aspiring young builders on their first project to well-established regional developers looking to build thirty luxury housing units, we can help by lending up to 65% of a site’s value and 100% of build costs for a project (subject to a maximum loan to GDV of 65%). With a longstanding track record and significant financial, legal, and property experience within the team, each project is assessed on an individual basis with bespoke tailored packages provided to our clients.

We thought we’d take this opportunity to profile three instances where bridging and development finance secured a project’s future, each in a slightly different way.

 

Enabling developers to continue building future homes …

A small initial loan and 100% of the construction costs needed to fund the construction of three new-build luxury houses in the desirable market town of Wimborne, Dorset.

Following early interaction in advance of purchasing the site, MSP were able to provide a tailored development package. This suited the borrower’s needs in supporting the purchase and funding the construction of three new residential dwellings. The early agreement in principle empowered our client to push on exploring two planning options in the knowledge that funding was lined up on the successful grant of either consent.

A smooth and efficient legal process lead effortlessly in drawing funds to complete the purchase on the date required and then provided access to the build funds on a monthly basis.

We have been delighted with the team at MSP Capital. Their experience and knowledge of funding development schemes are apparent. With a real can-do attitude from the initial interaction, through the surprisingly simple and straightforward process of drawing down the loan and then during the ongoing construction their ongoing support has enabled this project to be brought to fruition – R Kane

 

Ensuring development projects reach completion

Residential bridging loan secured against 23 new-build luxury 1, 2, and 3 bed apartments across two blocks in Epsom, Surrey with a GDV of £14m.

Our client is a highly experienced developer with a track record of delivering similar high-quality schemes in Surrey. With the existing loan having reached expiry and the project already 95% complete, we organised a bespoke residential bridging loan to bring about not only the successful conclusion of the development but provide a further commitment term to see the project through the all-important sales process. This project also faced a variety of complex legal formalities to be correctly administered along with the size of the overall loan. Timing and deal delivery were key factors for the developer with this project.

MSP Capital stepped in to help at short notice and right from the outset they demonstrated a practical, common-sense approach to the whole process and weren’t fazed by the size of the loan required. I was especially impressed by their can-do attitude and desire to get the deal done, whilst keeping me updated throughout the process. This is the first time I’ve done business with MSP Capital but we’ve already established a strong relationship and I’m looking forward to working with them again in the future – Andries Stricker

 

Securing current and future builds with Development Exit Bridge Loans

Highly competitive residential bridge loan secured against three remaining new build bungalows on a small development in Defford, Worcestershire.

Refinancing a high street lender, MSP provided a development exit bridge for an established Cotswold based developer. Churcham Homes are an experienced developer with an excellent track record of delivering high-quality residential schemes.

Terms were provided based on the completion of a brief enquiry form and an overview of the project by the borrower. Solicitors instructed on the day of acceptance [of these terms] and following receipt of the valuation report, meant that funds could be released to meet the client’s expectations and timeframes.

MSP Capital’s focused team, with a dedicated relationship manager, were in regular communication with the borrower, always available throughout the drawdown process and thereafter during the term of the loan to respond to any queries.

It was refreshing to deal with a lender who could make instant decisions and then delivered exactly what they said they would within the timeframes I required. Their interaction was excellent throughout the process and I am pleased to be developing a relationship with a modern forward-thinking finance firm – Stuart Hall, Churcham Homes

 

 

Time is always an important factor with both bridging and development loans, MSP Capital outshines others when it comes to applying expertise to turn around bespoke solutions in incredibly short time frames.

Whether it’s a flat refurbishment to a new build of luxury houses; commercial units to barn conversions; click here to get in contact with a team member and discuss your needs/quotation

 

We see our work as an enabler of property development. As such, it’s incredibly positive to be a part of a development’s journey and see it come to life. From initial enquiry throughout the entire project to eventual sale and repayment, we are always available and pride ourselves in maintaining ongoing interaction with our clients – Adam Tovey, Valuation Director, MSP Capital