Prices boomed thanks to pent-up demand and the need for more space and greater home working, helped along by the stamp duty holiday. But behind the scenes, property developers have had as hard a time of it as any. According to an Atradius report on construction industry trends, the sector’s output shrunk by 14% in 2020, and we expect a rise in insolvencies this year, as developers continue to face challenges.

During the pandemic itself, developers had to cope with lockdown-related broken sale chains, postponed house moves, and general uncertainty, which pressed the pause button on many transactions.

Inevitably, this has translated into delays to the sale of plots and release of funds, causing headaches for many developers and their original financing arrangements.

Fortunately, the bigger picture for developers is now improving as life returns to normal, and should be further enhanced by a targeted drive by the government to encourage property development across the UK via initiatives such as the Brownfield Land Release Fund. This is supported by a further £1.8bn which was earmarked in the Budget to renew and restore brownfield sites to create a further 160,000 homes.

This is all part and parcel of its manifesto pledge to encourage the construction of 300,000 new homes a year by the mid-2020s, bringing in small developers as part of that plan.

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But, of course, headwinds keep blowing against hard working developers in this market. There is a massive skills shortage in construction in the UK, with Covid prompting more older workers into early retirement and compounding the Brexit-related exodus of EU builders.

The resulting higher labour costs are matched by a leap in the price of building materials, which hit a 40-year high at the end of last year, thanks to Brexit and Covid-related issues around supply and logistics, according to the Building Cost Information Service. And that was before the market began to experience further issues with global supply chains as a result of the war in Ukraine.

The Federation of Master Builders said that 98% of builders reported higher material costs in Q1 2022; 73% of its members have delayed jobs because of a lack of materials and 55% have put projects off due to a dearth of skilled tradespeople. Such shortages, long delivery times, and costly new biodiversity requirements imposed on developers by the Environment Act 2021 are also affecting the speed at which developers can work — all of which impacts their bottom line.

So, while the long-term prospects for developers are positive, now perhaps more than ever they need support from the sector supplying the finance at every step of the way — and one of those key phases is the exit stage.

Developer exit loans allow a developer to refinance their completed scheme, usually at a significantly lower interest rate than the one charged on their original development funding, giving them the time and space to market and sell the plots, and often to move onto their next project at the same time. At InterBay, we can offer these loans from 0.59% per month to experienced developers, or even self-employed builders with a suitable case. We can consider single properties and multi-unit schemes which have reached practical completion, with no set minimum or maximum values. We can go to 75% LTV and will lend for up to 18 months to give your clients that essential breathing space, and we can be flexible on the fees.

We first launched developer exit solutions four years ago, so our underwriters are experienced in assessing these cases, as brokers used to operating in this part of the market may well be aware.