LDS Boost - The Autumn 2023 Issue by LDSBoostMagazine

Issue 03 Autumn 2023

Powerful knowledge for SME housebuilders, their lenders and ﬁnance brokers

A product to be proud of

Inside the world of a growing SME housebuilder

Also in this issue: Lender Spotlight with Adam Bovingdon of UTB

Property Finance

Close Brothers Property Finance and the developers of the future Transform sites with a Virtual Sales Director

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LDS Team

Fiona Connor

Siobhan O’Donnell

Mark Roberts

Chris Fortune

Richard Cannings

RELATIONSHIP MANAGER fiona.connor@LDSyoursite.com

RELATIONSHIP MANAGER siobhan.o’donnell@LDSyoursite.com

RELATIONSHIP DIRECTOR mark.roberts@LDSyoursite.com

RELATIONSHIP DIRECTOR chris.fortune@LDSyoursite.com

RELATIONSHIP DIRECTOR richard.cannings@LDSyoursite.com

Ben Jenkinson

Darren Reynolds

Mark Hawthorn

Alex Maltby

Kayee Au

MANAGING DIRECTOR ben.jenkinson@LDSyoursite.com

TRANSACTION AND PORTFOLIO DIRECTOR darren.reynolds@LDSyoursite.com

CEO mark@landmark-investments.co.uk

ORIGINATION DIRECTOR alex.maltby@LDSyoursite.com

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As the market softens, our resolve to support developers only gets stronger. Gone are the days when selling units can be an afterthought Welcome to the Autumn issue of LDS Boost, providing powerful knowledge for housebuilders, their lenders and finance brokers. In this issue, the last of 2023, we’ve aimed for a balance of experience and innovation – both vital components of a thriving market. Here’s a flavour of what’s inside: Ben Jenkinson, Managing Director

As the market softens, our resolve to support developers gets stronger and, given our Sales Guarantee reduces project risk, it’s no surprise that we are seeing record levels and numbers of enquires, especially from lenders. This has accelerated our requirement to grow the team and I’m delighted to introduce Alex Maltby and Richard Cannings as our two new originators in the South. Both bring skills, experience, and panache (they wrote that bit). We’re now well set to unlock housing and apartment transactions across England and Wales – large or small, simple or complex, pre- or mid-construction.

We feature two titans of SME development lending – United Trust Bank and Close Brothers Property Finance. Hot on the heels of our recent £10m transaction with UTB, Adam Bovingdon describes just how vital partnerships are to their consistent success. Dan Joyce and Andrew Argent of Close then tell us about their Tomorrow’s Developer programme, a first for the industry, which is accelerating the progress of new developers by providing access to (vast) networks and knowledge. Our cover feature gets right to the heart of our purpose – supporting developers to build and grow. Nicholas Ryan Projects are longstanding clients. The partnership is so powerful because NRP build and sell

excellent houses and LDS provide them with the confidence and capacity to do more of this. We’re proud to be working with them and their story is captivating. Gone are the days when selling units can be an afterthought. We introduce our new Virtual Sales Director service, which provides our developers with free experience and analytics to help sell more homes at better values. Enjoy reading and get in touch if you would like to discuss anything in greater depth – we’d love to hear from you.

ben.jenkinson@LDSyoursite.com 07810 753407

Click to find out how an LDS Sales Guarantee works in just 1 minute 54 seconds

United Trust Bank (UTB) and LDS Sales Guarantees recently completed their first deal together: the funding of a development of 27 apartments in Hornchurch with a GDV of around £10m.

An important time for collaboration 02

To mark the occasion, LDS Boost spoke to Adam Bovingdon, Head of Property Development at UTB, about the bank’s plans to continue its long-standing support for SME developers.

their respective areas, including local politics and planning, supply chains, new investment and regeneration programmes. Being local also makes the team accessible to customers and facilitates regular site visits through all phases of a project – which is key for keeping on top of the myriad challenges that inevitably crop up in this complex market. This encourages repeat business; over 50% of UTB’s originations are from existing customers who return to their local BDMs for that specialist approach.

Adam’s banking career spans more than 20 years, with 18 of them spent specifically in property finance. He joined UTB from the RBS Real Estate team in 2014 and now leads the specialist bank’s property development department. “I’ve always enjoyed working in the property industry,” Adam shares, “and it gives me a great deal of satisfaction knowing that, at any one time, UTB are supporting the creation of around 6000 new homes and helping housebuilders deliver high quality and energy efficient homes.” This support is set against the backdrop of a sharp decline in the number of homes being produced by SME housebuilders over the last 20 years. UTB recognises the vital role that these smaller companies play in the delivery of much-needed homes and its ongoing commitment to the sector is something Adam is proud to be a part of.

Adam views UTB’s strong network of intermediaries, many of whom have their own established relationships with housebuilder clients, as a critical extension of its sales team.

When asked about his outlook for the market, Adam admits that it’s undoubtedly tough going. “Housebuilders are operating in an environment of rising construction and finance costs, increasing regulation and a myriad of other challenges – particularly in the planning process. The rate of inflation is moving in the right direction, but I think it could be a tricky period for months to come – and we’re yet to see the full impact of the jump in interest rates,” he shares.

climate, certainty and a back-up to selling on the open market might be a deciding factor for some borrowers ”

“We also have transitionary loan products such as acquisition finance for site purchases, and developer exit funding – a product that assists existing customers by releasing equity from completed but unsold units towards future projects,” Adam explains.

Importantly, members of the origination team possess vital local knowledge of

“Especially in the current climate, that might be a deciding factor for some borrowers.”

“ Especially in the current

The bank has a loan book of around £1.3bn in residential and residential-led mixed-use projects across England and Wales. Its core development finance product funds up to 90% LTC or 65% GDV.

The UTB property development department works with customers across the country, from Cornwall to Cumbria, and is resourced with 15 directors, who are supported by 13 managers.

seeking to balance leverage and pricing on development finance. An additional benefit that the LDS Sales Guarantee provides for borrowers is the mitigation of sales risk – providing some certainty and a back-up to selling on the open market.

“This generates many enquiries a day, and we respond with Heads of Terms within 24 hours so that our introducers can best judge which transactions sit best with which funding solutions in a fast-moving and competitive sector where every penny counts,” he states.

Despite this, Adam cites the industry’s ability to adapt and overcome challenges as its greatest strength. He also notes that current and predicted demand for housing for purchase and rent is still outstripping supply, which is encouraging for those looking to build, fund and support the sector. “Although the outlook for the UK economy is somewhat cloudy, UTB will continue to work with partners to provide housebuilders and developers with the funding solutions they need to build and thrive,” he concludes.

It’s now more important than ever for lenders to collaborate to provide housebuilders with the funding they need. UTB’s partnerships – including that with LDS – are enabling SME housebuilders to access competitive funding at increased levels of gearing. “Our new relationship with LDS brings an additional and innovative new tool to the funding mix,” Adam comments. “There’s always a trade-off for borrowers

To contact UTB directly, please email Paul Turton pturton@utbank.co.uk or call 07887 716015

Much like insurance, you take it hoping you won’t need it, but when you do, it’s the best decision you ever made We successfully completed the cash purchase of seven unsold homes – with a combined value of close to £3m – from a developer client.

LDS provided a Sales Guarantee and interest-free cash release to D T Joseph, enabling the housebuilder to bring forward a site they had owned for some time. Unfortunately, the project had been severely impacted by Covid-19, rising material costs and other unforeseen circumstances.

called upon. As the market continues to soften, with rising rates and weakening demand, we expect to make further acquisitions for our investment portfolio.

buoyant; sales were completing as the units reached practical completion and reservations were coming in thick and fast. The hits to the budget and programme were countered by the increases in sales end values.

“This was a cash purchase concluded at short notice with minimum fuss. We have substantial LDS were swift, reactive and a breath of reserves and fresh air to deal with. At no point did they underwriting capacity delay and always sought to find solutions for new business.”

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At the end of the finance term, there remained seven unsold homes, accounting for almost half the site, with a market value approaching £3m. The housebuilder called upon LDS to complete on the units and was able to repay the lender in full. Andrew Fraser, Chief Commercial Officer at Assetz Capital, the senior lender in the deal, commented: “With the loan term due to expire, the developer exercised their right to call on LDS to purchase seven of the homes on the development. True to the agreement, LDS swiftly completed the purchase of these properties ensuring DT Joseph was able to repay the loan in line with the initial agreement.” Assetz Capital has been fully repaid – including all interest and fees. The developer was able to move onto other schemes and avoid a default situation.

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Mark Roberts, LDS Relationship Director, commented: “We are seeing increased deal flow as housebuilders and their lenders recognise the benefits of our Sales Guarantees in a down market. “We are also seeing situations where down valuations and increased interest costs are creating equity shortfalls, potentially killing deals. Our ability to release our 10% cash deposit can remove these shortfalls and is often the difference between a site moving forward or remaining undeveloped.” In a Boost exclusive, Daniel Lloyd, director at D T Joseph, shared his experience with this project and its funding, and what it meant to have the support of LDS throughout the journey.

When we agreed to progress with an LDS Sales Guarantee, we hoped it would “Our experience of working with LDS has never be needed – the housing market been extremely positive: from start to was flying, and we had a great product with a desirable location and high demand. Much like As a developer I can’t see any reason insurance, you take it not to use LDS. We must insure ourselves hoping you won’t need against all other risks, so why not insure our it, but when you do, it’s biggest one of all—the exit? the best decision you ever made.

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finish the, the process has been smooth, with effective communication throughout. Thanks to the LDS Sales Guarantee, we were able to receive full loan repayment and avoid any potential sales delays, removing risk throughout the sales process,” Andrew explained. LDS CEO Mark Hawthorn said: “The LDS role is to remove uncertainty, so we are always prepared to purchase properties if

With LDS behind us, it made funding the scheme far simpler, and we got the site out of the ground in early 2021. However, over the next two years we suffered from unprecedented material and labour price rises, along with industry-wide shortages of both. This stretched our budget beyond the contingency and pushed the programme several months out. Nonetheless, the sales market remained

However, following political uncertainty and a long list of poor governmental decisions, inflation became uncontrollable and interest rates started to climb to levels we haven’t seen in 15 years. Coupled with the material and labour issues, this created the ‘perfect storm’. Sales fell away as purchasers’ mortgages were pulled, new offers became unaffordable, and purchaser-reliant sales stalled. At one juncture, we lost four sales in the space of 10 days. Interest in our site remained but new buyers were unable to progress. As the months went on, we assessed our options — with our principal focus being the repayment of our development loan. The only way to ensure this was to utilise the Sales Guarantee, our ‘safety net’. The other option was to risk refinancing at great cost, with more interest and fee accrual, but still no certainty of sales on the horizon. Given the economic climate, this was not a sensible route. We knew our contract allowed for a 30day completion, but the time it took from serving notice on LDS to completion was just 20 days. LDS were swift, reactive and a breath of fresh air to deal with. At no point did they delay and always sought to find solutions to the usual hiccups in legals. Snagging was fair and reasonable, with inspections booked in promptly. The safety net worked; LDS delivered on everything that was promised without fail. As a developer I can’t see any reason not to use LDS. We must insure ourselves against all other risks, so why not insure our biggest one of all — the exit?

Daniel Joyce, Deputy Managing Director

Andrew Argent, Business Development Manager

Nurturing SME developers of the future

In November 2021, Close Brothers Property Finance launched Tomorrow’s Developer (TD), an initiative aimed at encouraging and supporting the next generation of housebuilders through a series of events – which have hosted hundreds of new SME developers to date – and the creation of a solid network of industry professionals.

To get in touch with Close Brothers Property Finance directly, please contact Andrew Argent: Andrew.Argent@closebrothers.com 020 3857 6270

The ultimate aim: to deliver more houses on a national scale. Given the obvious proximity of this goal to that of LDS, Alex Maltby and Ben Jenkinson were given the opportunity to speak at a recent Tomorrow’s Developer event. Alex and Ben discussed how LDS is taking a new approach to development finance through the provision of Sales Guarantees, and outlined how LDS can help the next generation of developers grow their businesses.

In this conversation, Alex speaks to Close Brothers deputy managing director Daniel Joyce and business development manager Andrew Argent about what they’ve learned through the programme, their thoughts on the current challenges facing developers, and what sort of support is needed to usher in the future of housebuilding.

AM: We see a lot of commonalities between what you’re looking to achieve through Tomorrow’s Developer and our mission: a commitment to growing both the housebuilding sector and also the next generation of SME housebuilders. It would be great to get a sense of what you have learnt through the programme so far, and how this ties in with your more general views of the sector. AA: It’s worth tracing back to why Tomorrow’s Developer was formed. We recognised within our own loan book that the average age of our clients was 52, and a lot more needed to be done in order to help the next generation of developers into the industry. The barriers of entry into house building have always been high – and for SMEs they’re just getting higher. It’s getting more difficult to penetrate into the market for a number of reasons, with the ability to obtain capital as well as securing planning quickly, at the top the list. As a result of an aging workforce, we are currently experiencing a skills shortage in the construction industry. It is now becoming less attractive for the younger generation to enter the industry with the uptake of construction related degrees on the decline. Therefore, this aging workforce is simply not being replaced. SMEs were the bedrock of housing supply up until 20 or 30 years ago. However the nationals have really strengthened their position and now have a large proportion of the market. It is important for us not only to identify and recognise who the next generation of house builders are, but to see what we can do as a business to try and help them navigate their way through the sector – because we know we’re not building enough houses. We’ve had five events so far – four in London and one in Manchester. What have we learned? The challenges that we uncovered at the outset are still present, and they are becoming increasingly difficult, particularly in terms of planning and trying to deal with an under resourced and outdated system. I do think there is capital available for younger, less experienced developers – however, obtaining it may involve having to be creative in order to unlock the full range of opportunities available in the market. DJ: I’d like to add that in our normal course of business, we’re focused on funding experienced developers, so naturally we’re going to have an older age base. But we are all about relationships: when do we start building them, and is there the opportunity for us to begin establishing them sooner? Whether they borrow from us from the outset is a moot point because we do still require that experience and track record – we’re not prepared to increase our lending profile risk unnecessarily. If we are unable to lend now, at some point in time, we hope they come back, and they

remember that they started that journey with Close Brothers. They’re part of a network and we hope that they potentially aspire to be a borrower of the bank. AM: Has anything surprised you about the type of developer participating in the initiative? Did you assume that they were all going to be young and green but there are actually slightly more experienced people attending because they need extra support? DJ: It’s interesting when we use the term ‘next generation’ the expectation is that you will be dealing with 25 to 30 year olds. In fact, developers can start out in their 40s and perhaps later. So, we have had an older average age attending considering themselves to be the next generation, because they want to get into the industry. And of course we don’t want to push that sort of interest away. We want to support everyone at each stage of their growth in, or entry into, this market. AA: There are two things that I’ve identified in terms of the London-based events. The first is the level of experience, which has been much greater than we thought it was going to be. There is a prerequisite for attendees of Tomorrow’s Developer to have at least two years of property-related experience. 35% of people who have attended have

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It is important for us not only to identify and recognise who the next generation of house builders are, but to see what we can do as a business to try and help them navigate their way through the sector – because we know we’re not building enough houses

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development experience, whether that’s new build or conversion. And I think, given the average age range, that’s really positive. For us as a business, this is great because we’re a few steps further down the road compared to what we had expected at the outset. We’ve already issued terms to people that fit the profile of Close Brothers Property Finance and Commercial Acceptances have completed on their first deal. Additionally, what really stood out to me is how passionate a lot of the people that attend are and how much desire they have to get into the industry and make a difference. Many that turn up are really chomping at the bit about a site they’ve found and are just so energised and enthusiastic about the whole process, which is great to see. Despite

the various aspects battering the market, they’re a resilient bunch – and those that want to press on will do so with a lot of vigour, that’s for sure. AM: Expanding on those aspects that act as barriers to entry and ongoing challenges, the survey that you conducted before making Tomorrow’s Developer live indicated that funding, sourcing sites and planning were the top three obstacles for SME housebuilders as a whole, not just those new to it. These have persisted as today’s barriers. How do you view the future of housebuilding, given the current uncertainty?

and the benefits coming off the back of that, but also for the end purchasers. What TD creates is an honest, educational network that opens people’s eyes as to what the industry is about – and if someone has a genuine interest in getting into property development, then this is what it’s there for. Conversely, they might learn enough to decide that it’s not something they want to pursue – which is also fine.

DJ: The value we can add is our extensive network, so we have brought in established developers to talk about their experiences. We’ve had some top-end experienced DJ: [Laughing] Right, the crystal ball is coming out. You housebuilders come in and speak to the group, but we’ve may have seen the State of Play report that we initially also introduced the flip side of that – developers who commissioned in conjunction with the HBF and Travis have broken into the industry in more recent years and Perkins in 2021. We’ve just released the latest iteration of come with a slightly different viewpoint as they’re in the this survey and we’re hoping to get some new raw data by early part of their journey. So, it’s not just us as bankers the end of October – but I’m not expecting the results to telling the network what change much. And planning to do – because we’re not is a particular issue. The developers. The presenters reason we’re doing the can give insight into What really stood out to me is survey is because we want questions such as what’s how passionate a lot of the people to get some real feedback your starting point; where that attend are and how much that can be presented within do you raise equity; what Westminster and be a voice risks should you take; how desire they have to get into the for the SME housebuilding do you reinvest your funds? industry and make a difference market which is really AA: One of the attendees important to the sector – it at the first event asked a makes up 15-20% of the speaker who the first person they employed was, and why. market. It picks up the smaller sites, such as the brownfield They said they’d hired a planning consultant so they could sites, and those that the nationals don’t want to touch. The engineer as much value as possible – which they ended up planning system works to the benefit of the nationals as it is successfully achieving. Some of the younger developers are structured today. being quite candid in terms of their responses; it’s not all We’ve seen SME housebuilder numbers reduce from circa rose-tinted glasses. It can be a tough slog, and you must 10,000 in 2008 to around about 2000 today. It’s a significant know what you’re doing. reduction, and it feels like it’s a constant battle. Looking into AM: Definitely. Candour and humility are important because the future, planning remains a problem, inflation has been you need to recognise what you don’t know and then fill an issue, and high interest rates impacts the cost of debt for those gaps. In the context of ever-changing dynamics, what both developers and home buyers. Smaller housebuilders have you covered so far, and how would you say the events don’t necessarily have the equity to finance significant have evolved over time? delays in planning. The industry is predicted to deliver less than 150,000 homes over the next 12 months. And if the AA: We try and have an angle or a theme to each event. The nationals are slowing down, then maybe the SMEs can pick first was called Breaking New Ground, and was very much up the slack. But they need help. an introduction to Tomorrow’s Developer. Our speakers AA: It needs to be made easier. The SMEs are very much the included Andy Hill from The Hill Group and Alex McDonald from Macar. The second event, in partnership with Savills, innovators in the industry; they’re building better, bespoke covered navigating the planning process and making products in areas where people want to live. And that is yourself more visible when bidding for sites when perhaps important not only for the industry, in terms of construction

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you don’t have the reputation or financial standing of a better known and local developer. The one after was on sustainability in the construction industry, hosted alongside Travis Perkins. They gave an excellent overview on current material prices, and their forecast for the next 12 months. This was during a period where material prices were very unpredictable, and was a key takeaway. We’ve also looked at the sales process and financing – the latter was the most recent event , with Nikki Treffers, Marketing Director at Berefords, providing advice about the benefits of having a robust marketing campaign. LDS gave a great presentation on their product and provided an alternative way to consider financing projects.

DJ: I have to say that I think the HBF does a very good job at promoting the sector. We’ve worked quite closely with them on the survey, and they’ve recently presented a letter to Downing Street highlighting many issues. There’s a swell of support for the sector and people knowing how important the sector is. However, for a lot of the newer developers coming in, where does the equity come from? You could look to Homes England to see how they’re supporting the next generation, because I think they do a really good job on large infrastructure projects and supporting the nationals. But what are they doing for the SMEs?

So, then, it falls on the private sector – the likes of you and us. How can we make the sector look attractive to get in? The challenge is keeping Tomorrow’s Developer fresh. What are the positives about breaking into the industry? Looking at the next 12 months of events, we’re coming up There’s obviously the financial with a few different ideas. side of things – if you can For example, perhaps make it work – and the having a small number tangible impact of delivering of people attending to The SMEs are very much the something. I think it is an have a bit more handsinnovators in the industry; they’re enjoyable industry to work in, on experience with a building better, bespoke products with some amazing people. developer. We want to avoid

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this becoming just another networking event; it needs to add real value.

DJ: It’s worth adding that we have had a lot of focus on London so far, but we are hoping that we’re going to have opportunities to expand it across the country.

in areas where people want to live. And that is important not only for the industry, in terms of construction and the benefits coming off the back of that, but also for the end purchasers

AM: My reflection is that the SME housebuilding market is quite fragmented. It’s difficult to reach everybody and identify all of the small housebuilders out there, as well as the aspiring developers. So, having a forum where you can bring people together has significant value – a place where developers can share ideas. Have you observed anything that you think that the industry more broadly needs to do to encourage fresh blood into the industry? AA: I think the government needs to do more in terms of apprenticeships, incentivising people into the construction industry. As we mentioned, planning needs to have a massive overhaul and make it easier for developers to join the industry. For me, those are the two big plays that the government needs to concentrate on.

AA: Not to mention the employment it generates.

AM: Housebuilding is probably one of the few industries where there is a place for a housebuilder in every single town in this country. You can’t say that for an awful lot of other industries that are specialised, so perhaps we should be highlighting that.

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If people want to get involved with Tomorrow’s Developer, how do they do that? AA: We have a dedicated webpage where people can register to be added to our database. When we have planned an event, we put it out into our social network and release it to our database as well. Read about past Tomorrow’s Developer events, apply to join and more by visiting https://www.closepropertyfinance. com/tomorrows-developer

A product to be proud of Inside the world of a growing SME housebuilder

Nick Eastwood

David Ryan

For this issue’s cover story, we wanted to get to the very heart of what LDS Boost is all about: the SME housebuilder experience.

project managing and David handled contracts. They soon realised they made a good team, so in 2011 they joined forces and Nicholas Ryan Projects was formed.

The founders of NRP Group financed their first job with a £1,000 bank overdraft, and are now delivering schemes worth over £10m.

“The synergy was great,” Nick says, referring to the combination of David’s building knowledge and his project management background.

We met with them to gain deeper insight into what it’s like to be building homes in today’s market, the characteristics you need to succeed, and the importance of setting – and maintaining – your own high standards.

Their first job was the restoration of a firedamaged flat in Manchester, and before they knew it, this line of insurance work expanded into houses and industrial units.

Based in Stockport, Nick Eastwood and David Ryan met while working at a land restoration company where Nick was

“Eventually, we were asked to cost up a new-build development,” Nick says, recalling the turning point in 2013. “We priced it, delivered the job, and that was the start of us, really. We diversified

directly into new build and have been doing just that ever since.” Nicholas Ryan Projects evolved into NRP Group, to mark the evolution from refurbishments to the creation and delivery of high-quality homes that have become its hallmark. A prominent theme for the pair is trust. From the close relationship they have as business partners to the person responsible for keeping the windows clean – every step of the way, there must be trust. Never was this truer than when David was diagnosed with cancer in November 2021. Supporting David’s recovery, Nick took over the reins entirely for a period of six months.

Pre-empting upcoming challenges – both those you have control over, and those you don’t – is also vital to success. And there have been many: Brexit, Covid, interest rate rises, labour and skills shortages, material costs… not to mention personal issues that can and do crop up.

from lenders such as PGs, debentures and others. From day one, the pair have put everything they have into making deals happen, taking a very personal risk on every job. NRP has surrounded itself with a professional team that it can rely on. From architects and solicitors to warranty and building control providers, these established relationships stand them in good stead.

“ On one of our sites, build costs

went up by 20%. You’ve got to find that during the job because you’ve only got so much development funding you can use ”

“My role is more about going to sites, seeing people and arguing with contractors,” David shares. “Nick mainly runs the office and handles the funding.

“But I had ultimate trust in him during this time because I know he’ll always make the right decision; he’s not rash, and he really thinks about what’s best for the company, first and foremost.” “Everything you go through brings you closer together, you know?” Nick says. Despite the misconception that developers have an easy life and are raking in the millions, it’s a lot of hard work. “There are many stumbling blocks we’ve overcome, and I couldn’t have done it on my own.” When asked about what it takes to cut it as a smaller housebuilder, David confirms that it’s all about attention to detail. Weekly site visits are required to keep on top of progress; although they employ site managers, no one else can truly see things ‘through their eyes’. “Someone in the company has to be a bit obsessive about details; without that, your standards can drop quickly.” The art, according to Nick, is not the

building as such; it’s the creation of a product you can be proud of. NRP isn’t contracted to deliver someone else’s dream project; these are their homes.

“You’ve got to be able to adapt,” Nick comments. “To have the mindset of, ‘We got over that, so now we need to think about getting over this’.” Among the current obstacles, rising costs stand out as having a marked impact. Pricing a job often happens 12 months before you actually get on site – and that means that, in today’s climate, the likelihood of changes to the budget is high. “On one of our sites, build costs went up by 20%,” David reveals. “You’ve got to find that during the job because you’ve only got so much development funding you can use.” The higher fixed costs represented by wages and development finance mean that developers need to build in bigger contingencies, work smarter on site and finish the job quicker. Nick and David also have significant skin in the game, and dipping further into their own funds to plug the gaps is not uncommon. Ultimately, the bottom line just isn’t what it used to be. “It always seems to me that we’re signing our lives away on every deal,” David says, referencing the multitude of requirements

Jason Roper is a good example: he supported NRP as a financial consultant on their very first deal and has continued to work on every one since. After 20 years spent at RBS, and three at Assetz Capital, Jason set up on his own in 2021 and launched Manchester Property Group (MPG).

Considered to be an invaluable member of the team, he is NRP’s first port of call when funding strategies need to be explored. “If something comes up and we need to get around it, Jason provides us with options – not a lot of people have that at their disposal,” Nick states. Although all NRP’s workers are technically self-employed, the company retains the services of a range of people they’ve come to know and trust over the years, and treat them as part of the extended team. “We have an in-house architect, and we retain site managers, groundwork staff and skilled joiners, among others,” Nick details. This continuity facilitates a more streamlined process on site, as each party is familiar with the others’ way of operating. A typical NRP scheme comprises between five and 20 units; sites are currently concentrated within an hour’s drive of the M60, but there are plans to expand into the south with a specific site manager heading up this area.

“Location is a huge thing for us,” Nick states. “We take that really seriously, and the due diligence behind it has to be thorough to make sure we can sell the units at the end.” This ‘numbers game’ is even more acute for an SME housebuilder, as they usually can’t afford to be speculative about how successful a scheme will be when it hits the market. Adding to the attractiveness of NRP’s finished properties is the company’s approach to standards, regardless of the specific unit’s value. “We’re not like your average builder” David tells us. “We kit out all of our homes to the same spec.” From fully tiled bathrooms and walk-in

showers to chrome sockets and Stuart Frazer kitchens, David believes that you’d be just as impressed by the finishes in a £1m home as in a more affordable one. Acknowledging that they cannot offer the same volume-driven elements as the larger housebuilders, they developed their own standard: high-end touches in every property, not just the pricier ones. One such development is Hiverley Grove in Twemlow Green, a site supported by LDS. This project marked a milestone for NRP in terms of scale and GDV. “It was our largest site to date, in a lovely rural area of Cheshire; seven houses of £1m-plus and three discounted properties,” Nick details, proudly. “There’s nothing else like it in the vicinity, and everyone was shocked that planning

We grabbed a few minutes with Jason Roper, NRP’s financial consultant, to get his thoughts on the market Experienced SMEs will continue to take advantage of opportunities. Why is now not the right time to sit back and wait?

There’s ample funding from a variety of lenders out there for development deals, so what are the sticking points?

Speaking to my existing experienced developer clients, a lot of them have been there and seen it all before, whether that was in the early 1990s or the 2008 financial crisis.

It’s about making sure the team collaborates, and therefore the lender we use needs to be reliable and use commercial sense when the deal is progressing through the system.

We have just come through Covid-19 and the base rate increases, and, along with building supplies going up, this brings various challenges for property developers.

I see a lot of delays caused by lenders when they receive the valuation or IMS reports, and then during the legal process. The ability to communicate with throughout the process is vital in expediting applications.

We know there is a new build deficit in the UK, with a backlog of 4.3 million; this would take the government half a century to fill. The message I am hearing from SME developers is ‘keep calm and keep building’ next year, when hopefully rates stabilise and confidence is back in the market, new build homes will be in demand.

Pricing is not irrelevant but it’s also not the key measure when pulling applications together. Using NRP as an example, what sort of attitude and experience are necessary to succeed in today’s climate? How does working with a specialist broker like MPG help? The ability to stay calm and understand

the market is key to their success. Working with MPG as part of your team brings experience and trust when undertaking projects. Every project is different; due diligence is applied not just on the finance, but on all aspects from inception to delivery. Our aim is to build long-standing relationships with our clients. A good broker is just as important as any part of the professional team. The LDS Sales Guarantee puts cash back in the hands of the developer. Why is this so important at the moment? In this market, cash is king. Therefore, having LDS involved in your projects gives the client a much-needed cash boost at the outset. I have worked closely with LDS and seen first hand the ease created through its simple approach. Jason can be contacted on jay@mpg-nw.com or 07901 504 128

“ Having a Sales Guarantee gives

our funder the confidence to fund the project; we know there’s an exit strategy there from day one, and so does the lender ”

Hiverley Grove in Twemlow Green

was actually granted on the site. The development is unique to the area and became highly desirable.” This was evident as, within two weeks, they had reservations for all 10 homes. NRP’s relationship with LDS is growing, and Nick and David really value the comfort a Sales Guarantee brings – especially as they start to take on larger schemes. “Having a Sales Guarantee gives our funder the confidence to fund the project,” Nick says. “We know there’s an exit strategy there from day one, and so does the lender.”

In addition to relieving lenders of risk, LDS has enabled the housebuilder to spread its equity across more sites via its interest-free cash deposit. In the case of Twemlow, £510,800 was released – money that can be injected into the project’s cashflow or used to acquire additional sites. Looking ahead, NRP remains positive about opportunities amid a housing market that seems to be slowing down dramatically. We often look at property development timelines in the context of uncertainty, but that could be spun into a positive in the current environment, Nick is of the

view that, 12 to 18 months down the line, demand will adjust to a new norm that keeps transactions moving – in line with the completion of their live sites. “People need houses no matter what,” he expands. “You’ve just got to continue to ride it out.” When asked for some final words of wisdom, Nick chalks it up to being a good and honest person. “Be patient and never forget where you came from,” he concludes. Given their trajectory over the last decade, we’d say they’re onto something.

LDS has recently launched its Virtual Sales Director service, available to all developer clients. Fully funded by LDS, the specialist team behind this offering has over 100 years’ combined experience in property, with many of those spent as housebuilders.

sits in the market, who the competition is, which features their product has that others don’t, and how their price point compares. We are undoubtedly looking at a challenging market at the moment, with increased mortgage rates and negative press reports. In an oversaturated space, developers need to ensure their product

After stopping all advertising, we worked with one local agent to create a whole new identity for the site, renaming the development and creating a stunning video tour showcasing the best houses, alongside drone footage promoting the local area (the development’s best asset).

Ideal for businesses that would love the We set up a show home and two view expertise of a dedicated sales department homes and organised open days with but can’t warrant one, LDS’s Virtual significant online advertising Sales Director brings a level of that was backed up with local know-how that acts as a vital agent promotion and newspaper extension to your existing team. All remaining units sold above coverage. By employing their listed prices, with three This service combines the skills, neighbourhood tradespeople experience and data necessary to finish off the properties houses even selling to people who to equip SME developers with and furnish the show home, it had viewed at lower prices prior to amounted to a real local news everything they need to obtain the best sales prices for their story. the relaunch projects. All remaining units sold above Sales strategy – what we call their listed prices, with three is priced correctly and given maximum ‘the fourth corner’ – is often neglected, houses even selling to people who exposure to ensure sales are achieved resulting in less-than-optimal returns. had viewed at lower prices prior to the ahead of their competitors. Here the team outlines a few important relaunch. areas that are frequently overlooked, We were recently instructed to handle £1,000,000 uplift in GDV achieved and offers advice on how to avoid these sales on a stalled site of 34 units – a mix common pitfalls. of houses and apartments. This project Most developers have a good handle on had a distinct lack of structure when it their construction budget and can quickly How you position your scheme can came to listings, signage and pricing, assess costs to date and to complete, as make sale prices skyrocket coupled with a brochure that was simply well as how to value-engineer a project to It’s imperative that a developer misleading. maximise profit. The marketing budget, understands exactly where their product however, tends to be one of the last

“

”

We remodelled the approach through landscaping and redecorating, and commissioned a local artist to produce paintings associated with the

“ A complete review of the sales

and marketing approach meant the developer actually achieved a GDV close to £6m – £1m higher than expected ” neighbourhood. We also renamed the development, created new signage and worked with appointed agents.

things to be considered – with no real strategy implemented in spending what often amounts to a limited pot of cash. There is a typical order adopted when working out expected marketing expenditure. For example, getting the computer-generated imagery (CGI) commissioned ahead of ordering the site signage may seem obvious, but making this happen requires the discipline to draw up a plan and stick to it. Budgeting is not a one-size-fits-all task; not every site has the opportunity for good site signage, for instance, so each must be considered on its own merits, with a plan allocated according to what’s going to give you the best bang for your buck. It is also important to start your campaign at the right time. If your marketing is insufficient and you begin too early, the opportunity to make a good first impression will be lost; start too late, however, and you miss out on buyers who may have chosen your product when they had the ability to personalise some features, such as kitchen and tiling options. We were once brought in on a scheme of 53 apartments, where only three had been reserved. An initial inspection revealed that the entrance for viewers did not showcase the development in its best light; as this was also the exit route, the lasting impression was also poor.

The original expected GDV (based on the sales that had been achieved on the most desirable units) had suggested the development would struggle to hit £5m in sales. A cost-effective refurbishment and a complete review of the sales and marketing approach meant the developer actually achieved a GDV close to £6m, with all units sold within 18 months. This was despite the original units having been priced 20% lower and on the market for four years prior to the instigation of the new plan. This will negatively impact values… Typically a ploy to get sales moving, low prices can, however, set a precedent for future sales – particularly where valuations by mortgage providers’ surveyors are concerned. We have witnessed developers selling a few of the less favourable plots off plan at a discount to secure early sales (usually to satisfy a funder), but this can be an expensive mistake, as valuers will use recent sales as a rule for comparables. …Similarly, opting to do this may adversely affect gross revenue Selling your best stock first provides both immediate cash flow and some comfort that the development and its sales programme are on track. However, we’d warn against offloading the more challenging plots last. There is less chance of increasing sales values and maximising gross revenue when your

highest-priced units sell first. Future buyers will always compare (as will surveyors) the remaining units against the units already sold, thus creating a precedent for price. Similarly, for a scheme with multiple units and a variety of house types, listing them all at the same time will limit your opportunity to increase prices as sales are achieved, and creates over-exposure on platforms such as Rightmove. We worked on one case where the 20 prime units – all with south-facing gardens overlooking the river – had sold off plan, encouraging the developer to discount the 14 remaining plots that had less desirable positions. These properties were being double listed by an additional agent, and this created an air of ‘desperation’ online. The existing agent’s idea to create more demand was to reduce prices by 10% across the remaining units – but this suggests to potential buyers that something is awry. We tackled this by removing all existing adverts and relisting just one of each house type, while also overhauling the signage. We used a quality hoarding to promote the fact that two thirds of the development had sold, and pushed this message via our extensive social media network. The end result was a GDV £250,000 higher than the original agent’s estimation. Double your exposure on searches with this one tip Agents and developers who are unfamiliar with the price bands on Rightmove may think that the old-fashioned strategy of stating a price as ‘just under’ is the correct way to attract buyers (e.g., £299,950 rather than £300,000). The problem with this is that the advert only appears on buyer searches for £250,000– £300,000. If the developer pitches the price at £300,000 instead, their property will appear in searches using both the £250,000–£300,000 and £300,000– £350,000 bands.

Rise of the YIMBYs: engaging younger people in the planning process With her experience running Just Build Homes, a digital platform for engaging supporters of housebuilding with the planning process, Millie Dodd is on the front line of the YIMBY (which stands for Yes In My Back Yard) movement. We caught up with Millie, the 26-year-old Communications Manager at Just Build Homes, to get her views on mobilising supporters of housebuilding to engage in the planning process in order to get the homes we need approved and built. It’s harder than ever for young people to get on the housing ladder. Homeownership is the lowest it’s been for 50 years. Millions of people in their 20s and 30s are still living with their parents, unable to afford rising rents. Those who do rent have little left over to save for a deposit. As a result, a whole generation is stuck in housing limbo. However, access to safe and secure housing is a necessity, not a luxury. Over 17 million people are impacted by the housing emergency, according to the Land Promoters and Developers Federation (LDPF). So, where are the millions of angry younger people demanding more homes to be built? Just Build Homes knows that in every area of the UK there is a majority who support building more homes in their local area, but they are not being reached in the traditional planning process. This audience do not care about planning arguments, height or density. They care about having access to secure housing near their family, friends, and community ties.

The planning process, unfortunately, has been dominated by objectors with lots of time on their hands. Traditional planning consultations tend to be centred around appeasing these objectors, who are never going to change their mind about new developments. “As a young person myself, the only exposure to new developments in my local area, prior to my work at Just Build Homes, would be local people posting on Facebook groups about how to object and what to say,” says Millie. This is compounded by the complexity of the planning system, according to Millie. “Planning portals are complex and full of jargon – and in some cases they don’t even consider the idea that there could be support. They only ask ‘do you object or not object?’” Just Build Homes is at the forefront of the YIMBY movement and is helping supporters be heard. It is bridging the gap between housebuilding supporters and the official planning process, making it simple and easy to comment on planning applications in their local areas. Millie explains: “We are giving a voice to the silent majority, who are in favour of building new homes in their own area but rarely have their say in the debate. We believe that the voices of people who want to get on the housing ladder and have a decent home are as important as those already on it. It’s time to change the narrative around development. From our experience, when the playing field is levelled and supporters of housebuilding are engaged, decision makers will take notice and make their decisions based on the merits of the scheme, not the politics.”

Just Build Homes is able to engage with younger people effectively because it talks to them directly where they are, on social media, giving them the opportunity to speak about their personal experiences of the housing crisis, changing the story around development and increasing supply as part of the solution to the housing crisis. The Just Build Homes team has set up a nationwide digital platform for supporters, www.justbuildhomes.co.uk, which is free for anyone to use. The team also works directly with developers to help engage and mobilise these supportive, harder-toreach audiences. They have worked on over 50 projects nationwide so far and have built a community of around 8,000 people who want to see more homes of all types built. The government has recognised that the current planning system needs to be made more user-friendly and inclusive, launching the Digital Planning Programme through the Department for Levelling Up, Housing and Communities. It has also consulted with Just Build Homes for their digital expertise and insights into on engaging with supporters of housebuilding.

To get in contact with Millie, email millie@justbuildhomes.co.uk

Millie Dodd, Communications Manager at Just Build Homes

LDS News LDS sponsors Variety PROPS Awards We are proud to be a sponsor of this year’s inaugural North West Property Awards being held in Manchester on 30th November. The PROPS – already hosted in London annually – is a long-standing fixture of the property calendar, doing incredible work to support disabled and disadvantaged

young people through Variety, the children’s charity. To date, they have raised over £3m.

hosts,” Mark Hawthorn comments. Mark also sits on the PROPS committee for 2023.

“PROPS is a major event, attended by many of the big names in our industry. LDS is sponsoring the Funder of the Year category and we look forward to celebrating with the nominees and other

If you’d like to find out more about the NW Props Awards, visit www.variety.org.uk.

LDS and PMJ Capital generate £50,000 for The Toy Appeal LDS and PMJ Capital were recently involved in a transaction which generated a £50,000 donation to The Toy Appeal. Mark Hawthorn said: “This has originated from a sizeable piece of business we

referred to PMJ. We are always happy to make introductions and referrals where we see a fit, it comes very naturally to us. This one was quite sizeable so the PMJ team wanted to show their appreciation and a generous charity donation was agreed. The Toy Appeal do excellent work

and now they can spread a little extra joy this year.”

LDS promotes Ben Jenkinson to Managing Director In his new role, Ben is running the company’s origination, transaction, and portfolio management functions, as well as continuing to lead LDS development lender relationships.

and lender partnerships that we have on the way — we’ll keep doing things differently as we continue to reframe the development finance landscape,” he adds.

Since Ben joined us in January 2022, the Sales Guarantee offering has been established as a powerful enabler of new housing.

In line with our growth, we are currently recruiting and would love to hear more from experienced development finance originators who are keen to be a part of our exciting plans.

“I’m excited about the brilliant team we have built and the new products

Podcast LDS CEO Mark Hawthorn appeared on The Property Funder Podcast with host Michael Dean. Michael is the co-founder of Avamore Capital, a specialist non-bank property lender, and Chartfield Homes, a land promotion and development business.

In this wide-ranging conversation, Mark shares his beginnings in property; anti-hustle culture (he’s a fan); reading habits; the ground rent sector, and much more. The episode is available to listen to now, wherever you get your podcasts.

Out and about NACFB Expo 2023

High Performance Podcast live

Property Race Day at Ascot

NW Homebuilder Awards

LDS News We hosted our Summer BBQ! On 12th September, we welcomed close to 100 housebuilders, brokers, lenders and professional partners to our LDS Summer BBQ at Dukes 92 in Manchester. Our guests (some of whom turned up half an hour early!), gathered in the glorious sunshine on the terrace, enjoying delicious food and drinks and getting to know the LDS team better. Thank you very much to everyone who made it—enquiries came in hot off the back of conversations had on this fantastic day and we can’t wait to deliver on them.

Reduced valuation? Increased costs? Hesitant lender? Equity shortfall? LDS can help. We provide fixed-cost, interest free development capital and completely remove sales risk from projects.

Get in touch. Ben Jenkinson, Managing Director +44 (0) 7810 753 407 Ben.Jenkinson@LDSyoursite.com

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