Catherine Spode


Richard Norton



CS Richard, I believe we have several new finance packages available, perhaps we can focus on one. What kind of property developer is it for, and how does it work?

RN It is designed for developers with a good track record and who are able to make a cash contribution towards the overall cost of the project.  This contribution could be as low as 10% of the equity required after senior debt and mezzanine has been arranged.

CS What are the minimum and maximum advances available?

RN Projects can range from £3 million project costs to £150 million.  Minimum advance is £10m, maximum £150m

CS And what does that cover?

RN Land, build out, professional fees.  The funding is debt, mezzanine and equity up to 98% of all costs.

CS That is generous, as the equity stake required is relatively small. What does the interest rate look like?

RN Senior debt is circa 7%, mezzanine 15% to 20% and the equity is 50% profit.

CS Are there any  particular limitations on geographical areas?

RN It is available for quality projects, with good profit margins,  throughout the UK

CS What are the fees?

RN Fees applicable on most facilities are 1% arrangement fee, and 1% exit fee,  plus our broker fee of course

CS Is this exclusive to R and E Finance?

RN We are one of a few brokers in the UK able to access these facilities.

CS It really is coming home. Speaking of homes, are there concerns at the moment regarding the economy – will people be able to obtain first time mortgages and then move up the ladder?

RN If you look at the Bank of England Financial Stability report of July 2021, house price growth and housing market activity during 2021 H1 were at their highest levels in over a decade.

CS So that is during the Covid lockdown period?

RN Yes, this, they say, is a result of temporary policy support and structural factors.

CS How do you see the next few months in terms of people and the property ladder?

RN As the Bank of England notes, the Financial Policy Committee’s mortgage market measures are in place and aim to limit any rapid build-up in aggregate indebtedness and in the share of highly indebted households.

CS This is the key area we are all looking at..

RN Yes. The FPC is continuing its review of the calibration of its mortgage market measures.

CS It seems to me that people will proceed with property purchase, be it first time or moving up the ladder if they can see career or job security

RN In the long term, that is absolutely correct. However, we are seeing an increasing appetite on the part of pension funds and family offices for the Build to Rent sector.

CS So these funds – pension funds or family office – are able to pre-purchase units which are yet to be built?

RN As I said in the interview in June 2021, we have assisted developers -- in some cases – to maximise lender’s confidence in the project through forward purchase arrangements, whereby a  Corporate bulk buyer commits to purchase the completed batch of units at a discounted rate and pays a deposit.

CS So that cash deposit on a whole batch of units de-risks the project

RN Yes, the bulk buyer will undertake  to purchase the stock when complete, pay a cash deposit on exchange, which can now be accepted by some of our lenders as the proverbial “skin in the game” of the developer.

CS Is that something a developer can look at if they are anxious about going into construction now with uncertainty about achieving sales in some 18 month’s time?

RN Yes, funding with pre-purchase as part of the equation is something we can discuss with regard to quality projects.

CS And developers requiring a top level negotiator for their finance should..

RN Contact you in the first place, Catherine, you seem to be able to discuss their needs with them and prepare their applications so that they really are ready to put in front of the funders

CS Thank you, Richard.