Fast forward to 2014 and we are seeing an interesting example of history repeating itself. Lenders with relatively little experience in this sector are now trying to become competitive on the products they are offering, giving developers an array of choice of rates when sourcing cash for their projects. But how important is experience and knowledge in the successful funding of a development? Here at Regentsmead we think this is paramount.
Having been in business for 80 years, in 2014 ‘reputation’ has allowed Regentsmead to do record levels of repeat business, with many of its borrowers citing trust as the single most important factor when looking for a lender.
Chief Executive James Bloom commented: “We were one of few lenders that continued to lend right the way through the recession as we have done through the numerous economic dips during our 80 year history.
“It’s alarming that despite the recent problems some clients still believe they can go with the cheapest deal on offer and then end up coming back to us several months down the line having had bad experiences of lenders that don’t understand the sector. Ultimately these developers will lose money after their projects come to a standstill proving that experience is everything in this industry.”
Whilst the signs of an economic recovery are evident in the development finance and general property market it is perhaps a concern that so many lenders are stepping in with relatively little understanding of the nuances of a development finance case. When another downturn inevitably happens this will be the acid test of a lenders ability. If history were to repeat itself it is likely to be the lenders that don’t understand the market and end up leaving themselves exposed and unable to aid the growing need for housing in the UK. Perhaps reputation isn’t essential for some lenders when a quick deal in a growing market is top of the agenda.
Like any market it is possible to come across concerning practices and the development sector is no exception. There are tricks that some lenders will use in order to secure themselves, even if the deal doesn’t go ahead. An example of this is a lender that takes up-front fees for site visits. Thinking from the lender’s point of view they are at their most profitable by building up a long term relationship and lending money to a client over a period of several projects rather than a one-off. The idea of an up-front fee even before you have decided if you wish to proceed should sound warning bells. From the introducer’s point of view allowing your client to become involved with such a lender could ultimately lead to your relationship with the client being damaged or broken.
Now Regentsmead are in their 80th year, it is fair to say knowledge is a very big USP and reflective of the quality of service they offer. The looming question is when a client is looking for funding do they play it safe and receive a great service and product from a company with a reputation such as Regentsmead, or run the gauntlet and look for a cheap alternative?
For an immediate decision contact the team on 020 8952 1414 or visit www.regentsmead.com
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