SME developer boom pushes Shawbrook past £1bn lending milestone

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  • Shawbrook Bank has lent more than £1 billion in development finance since launching the product in 2016.
  • It passed the milestone after lending £380 million in the 12 months to April, with loans to smaller developers almost tripling year-on-year.
  • Funding for the Photographic Works residential scheme in Birmingham saw the bank reach the target.
  • The milestone follows the bank’s acquisition of RateSetter, the launch of a new technology platform and record numbers of repeat customers as it targets further growth.

Shawbrook Bank, the UK’s leading specialist lender, doubled the number of loans it made to property developers in the 12 months to April, reaching its target to lend £1bn in development finance almost a year early.

The bank, which supports developers across the UK buy assets for residential and mixed-use schemes, provided 92 loans over the period at a value of £380 million up from 44 (£180 million) in the previous 12 months.

Appetite for new developments accelerated through the pandemic resulting in a significant rise in funding requirements, particularly among smaller developers that the bank says are underserved. Its loan volume to developers with debt requirements below £2.5 million almost tripled, funding 49 projects at a value of £56 million.

The milestone follows the bank’s acquisition of RateSetter’s peer-to-peer funded development finance business last December as it focuses on supporting more smaller developers.

Shawbrook says that this increase in scale and capacity, together with the launch of Cloud Lending – a Q2 Company and a new loan management platform – and record numbers of repeat customers, positions the bank well to accelerate its growth strategy.

Terry Woodley, managing director, development finance at Shawbrook Bank, said:

“Reaching £1 billion in development loans represents a significant milestone for our business. The fact we have achieved it in less than five years is a testament to the strength of our product, the expertise of our team and our commitment to supporting developers across the sector through challenging periods.

“Appetite for property endured the pandemic. We’ve seen strong demand for funding from large developers delivering significant eco-developments and regeneration projects, to the smaller developers that need a specialist lender to understand how they operate and can work with them as they deliver schemes concurrently.

“Our customers are increasingly pushing boundaries to tackle the UK’s development challenges. As we target the next £1 billion, our focus will be championing the innovation that will ultimately lead to more sustainable and affordable developments in the years to come.”

Growth in Shawbrook’s development finance portfolio in the 12 months to April was particularly strong in Bristol and the South West, which represented 25% of the total lend compared with the South East 30% and the Midlands 11%.

The bank has supported a total of 238 new developments in reaching its £1 billion lending milestone, delivering 3,500 residential houses and flats, 601 commercial units and more than 1,000 student rooms.

The business reached the target with a loan for the new Photographic Works development in Birmingham, which is being led by development company Hatchbury.

The project, which is located on the 35,000 sq. ft. site of the old photographic processing works in the city’s Jewellery Quarter, will include 48 one and two-bed apartments and duplexes.

Patrick Kennedy, director at Hatchbury, said:

“Our approach is to retain and enhance the areas that we develop in and this new development will celebrate the site’s photographic heritage while providing quality, affordable housing in what is a historic part of the city.

“Shawbrook understands how SME developers operate and the markets they move in and the team worked closely with us through the planning stages to enable us to deliver the right project. We look forward to working with them again in the future.”