The Resolution Foundation is a non-partisan think-tank working to improve the living standards of those in Britain on low to middle incomes and according to its recent report, home ownership rates for families aged 25-34 are rising for the first time in 30 years.

The report highlights that fewer than one in five young families own their own homes in Manchester, Liverpool and Birmingham.

Barriers restricting the ability of first-time buyers to take their first step on the property ladder remain acute, but eased credit conditions and a slowdown in house price growth in recent years have improved the situation for young first-time buyers.

This change in fortune has seen home ownership rates among those aged 25-34 have risen by 3 per centage points since to 28 per cent, since the lowest recorded point in 2016.

However, despite this recent upward trend, it is expected that renting will continue to be the answer for the majority of young people, particularly in the UK’s major cities.

Falling home ownership rates and reduced access to social housing, have driven rapid growth in the number of people and particularly young families who rent properties in the private sector, with around 34 per cent in privately rented accommodation.

Developers and landlords understand market

In our experience, this is the market being catered for by developers, seeking to return old, often large dilapidated houses back to modern homes, split into flats of more manageable proportions, often with shared features designed to enhance the experience of their tenants.

Smaller professional landlords are expanding their portfolios as more ‘amateur’ landlords leave the sector due to the recent tax and stamp duty changes, recognising the opportunity available to them as the number of landlords contracts, but the demand for rental accommodation increases.

Over the past few years, the number of these “build to rent” (BTR) developments has been growing rapidly in Britain, and this month the government gave its official blessing to the rise of the sector in its new national planning policy.

The market continues to change at pace, which requires alternative lenders like Signature Private Finance to remain agile and flexible, always looking to improve or re-imagine our products and service to better reflect the needs of developers and landlords.

Interestingly, a growing trend has seen big developers build thousands of properties with the principal aim of selling to large investors, who will rent on the modern, well-equipped properties.

It is hoped this new approach, will increase the supply of housing, improve the quality and choice of accommodation available to renters, with the potential to transform the future of major towns and cities in the UK.

The British Property Federation has calculated that already more than 100,000 such homes have either been finished or are planned across, with around half of this number, unsurprisingly in London, with Wembley the site of the largest development of 5000 homes.

Buying and renting out homes built for the purpose provides pension funds a steady, reliable income and already we are witnessing large institutions like Legal and General getting involved, with the insurance giant reportedly set to invest more than £1bn in ‘buy-to-rent’ schemes.

A scalable business model

In many respects the ‘buy-to-rent’ approach is not really different from the ‘buy-to-let’ approach of most professional developers and landlords.

The difference is scale. We typically support the efforts of developers to purchase a property, often in poor condition, thanks to bridging finance arranged quickly and consistently, before it is refurbished with further funding we provide against the property’s increasing value.

Whilst we provide loans for as short as 3 months at just 0.45%, our experience helps guide developers to blended rate products that insulate them against refurbishment overruns, which can result in late repayment penalty charges.

Many of the developers using the services of Signature Private Finance will typically complete the refurbishment to add significant value to the rejuvenated and desirable property, before selling on to a professional landlord who understands the local private rental market.

Reflecting the growing appetite of developers, we have increased our loan book over the last 12 months by over 75% based largely on improving deal turnaround times.

Our highly-rated service now includes an automated deal process, designed to improve access to funds for those looking to react quickly to opportunities in the market.

Recognising the important role we play in fulfilling the housing needs in this country, from houses of multiple occupation to luxury apartments, we will continue to refine our service and ensure we achieve our long-term aim of becoming the number one alternative lender.

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