Pure Structured Finance’s Predictions for 2022

A Roll on from 2021

With all the obvious complexities brought on by the pandemic last year, Andrew believes 2022 will follow a similar suit in some respects:

“What I am seeing so far is predominantly a roll over from last year. The knock-on effect from covid has meant that development exit deals are still prevalent.”

Investors Exploring All Avenues

With uncertainty still rife, investors will be seen to seek out new loan deals, or reuse existing ones. Andrew says:

“Build delays and sales market uncertainty has often meant that clients either had to extend their debt with their current lender or refinance.”

“The benefits of finding a new lender are that they can often reduce the interest rate they are paying or, and arguably more importantly, release equity from their current scheme which will allow them to purchase their next.”

Commercial Investment Focus

Though things are tricky across the board, Andrew believes a shift back towards commercial purchases will materialise:

“Commercial investment seems to be coming back into focus now as well and I think we will start seeing more deal flow in this space over the next few months. We have had a number of clients coming to us this year looking at new commercial buy and hold deals, and also looking to refinance existing commercial portfolios.”

“We are also seeing a push from lenders in this space which confirms that thinking. Prominent lenders in the market have revamped their commercial offering and are pushing better rates for us to help facilitate our clients’ requirements.”

While these aspects of property investment are predicted to materialise as the year progresses, some trends can be seen in real time.

Capital Raising on Unencumbered Units

This is something that has been reflected in a lot of recent activity, Andrew explains:

“Developers are making considerable profit on some builds thanks to a rise in capital on unencumbered units. This happens when the initial loan is paid off before all units are sold, so money earnt renting the remaining units is total profit. This then allows them to take out unencumbered mortgages on those units to free up all the capital”

Non-Completed Sites with Funding Issues

In light of the past couple of years, where strain has been put on all industries, Andrew explains how this has impacted development progress:

“Throughout the global pandemic and Brexit, the cost of materials and labour has skyrocketed. This means many large-scale developments are now costing a lot more money than was originally thought.

“In many instances, that means contractors, brick layers, labourers and other tradespeople are asking for more money too. This all means developers will likely need to borrow more money halfway through the job to get a project finished and sold. This is difficult to do at the best of times not least in the circumstances we currently find ourselves in.”

Looking for Development Finance?

Andrew and our specialist team of advisors offer the highest level of expertise when it comes to obtaining a development loan.

So, if you would like to develop or refurbish a property in 2022, maximise the chances of getting the funding you need by talking to our team today.